Sunday, January 11, 2015

How Much Is Rooftop Solar Worth?

While we were focused last month on reviewing thousands of pages of proposed land management plans that would encourage utility-scale renewable energy projects across the California and Nevada desert, a seemingly obscure ruling by an administrative law judge quietly dismissed a key argument activists use in defense of wildlands and wildlife - that distributed generation is a better alternative to utility-scale renewable energy because it does not require the destruction of intact wildlands.  The ruling (.pdf) was part of an initial step by the California Public Utilities Commission (CPUC) to determine the price utility companies pay for energy generated by rooftop solar projects, known as net-metering.

Reading the statements and briefs submitted by various interests involved in CPUC's effort to determine how much rooftop solar is worth can seem almost perfunctory and sober to someone who cares a lot about the landscapes affected by large-scale energy generation of any kind - fossil fuels and renewables.  I imagine it would feel the same way for soldiers and citizens of two war-torn countries if they had to listen to their elites banter back and forth in protocol-smothered negotiations seeking token face-saving measures to allow peace.  Do the people at the table understand the consequences and implications of the outcome?  With mountains on the east coast stripped of their coal to feed noxious power plants, and mountains in the west capped with hundreds of 400 foot tall bird and bat-killing wind turbines to power our air conditioners, rooftop solar is an obvious escape from the violence of our current energy paradigm that has ravaged our land and wildlife over the past century.  The value that CPUC ultimately sets on the energy generated from solar panels on rooftops or over parking lots will affect how much and how quickly we can generate energy in our cities, rather than destroy our wildlands.

Here is some context for what CPUC is doing.  Today, if someone in California installs solar panels on their home or business they can benefit from lower utility bills, and they will be compensated at the full retail rate for any surplus energy generated by the solar panels that is shared with the grid.  However, CPUC was tasked by California legislators in 2013 to determine an accurate value for the energy generated by rooftop solar panels (I will call it rooftop solar, but a person might have panels installed over parking lots, or in their own backyard).  As you might expect, utility companies want the value to be much lower to protect their own outdated business model.

A pile of Joshua Trees removed to make way for the Alta Wind Energy Center near Mojave, California.  Photo by Friend of Mojave.
Utility companies argue that people with rooftop solar panels do not pay their fair share of what it costs to maintain a large and expensive transmission and distribution grid, as if every component of that destructive system is assumed to be desired and necessary.  What utility companies do not say is that they oppose a fair value for rooftop solar because such compensation will encourage more people to install rooftop solar panels, and when more people generate their own energy, utility compy profits nose-dive.  Why?  Because utility companies make their money on building remote, centralized power plants that require new transmission infrastructure.  If a utility company upgrades or builds new transmission lines, not only do they charge ratepayers for the material and labor, but the utilities are also allowed to collect a roughly 10% rate of return on the infrastructure.  That is a higher rate of return than most businesses could expect from their investments, but utility companies receive this rate as default because it it set by California regulators.  That is why central station power plants built in the remote desert are a dream come true for utility companies - they get to justify expensive (and thus, profitable) upgrades to the transmission system.  We pay the costs, we lose wildlife and land, and a select few get wealthier.

Victor Valley College installed solar over some of its parking lots, generating clean energy and saving money on its energy bills. A much more sane alternative to bulldozing desert wildlands.
So the December administrative law ruling is contentious because it identifies the scope of factors that will be considered in determining the value of rooftop solar.  While the ruling did indicate that the avoided transmission costs should be included in the consideration of rooftop solar's value, the judge ruled that avoided land use impacts would not be considered.  In a statement from Pacific Gas and Electric, the utility company opposed the inclusion of avoided land use impacts and avoided societal costs of carbon as "illusory or ill-defined."  Illusory!  Bulldozers scraping deserts and mountains are far from illusory.  And the health impacts of fossil fuel plants are obvious to those that suffer asthma or living with the effects of climate change.  The utility companies want CPUC to treat rooftop solar as existing in some sterile vacuum where the underlying assumption is that central station power plants and a behemoth transmission grid are necessities, and where people are "customers" and not hikers, campers, and individuals that care about wildlands and healthy communities. 

This photo shows less than one-third of the Ivanpah Solar project in the Mojave Desert.  Nearly 5.6 square miles of high quality and diverse Mojave Desert habitat was bulldozed or mowed down to make way for this project far from our cities.  It required a multi-million dollar transmission line upgrade.
The immense societal costs of fossil fuels - such as avoided carbon emissions and health impacts - may be considered in the valuation of rooftop solar, but it is not clear to what extent.  The ruling in December, however, made it clear that avoided land use impacts would not be considered.  Determining a value of rooftop solar without appropriately acknowledging land use impacts and the societal costs of fossil fuel generation would embed a considerable flaw in California's energy market.  Land use impacts of both utility-scale fossil fuels and renewable energy are a key reason distributed generation - such as rooftop solar - should constitute a larger bulk of our generation capacity.  Encouraging robust deployment of rooftop solar and avoiding destruction of the land can address a number of environmental problems, including habitat loss, dust pollution (PM10) caused by ground disturbing activities,  groundwater depletion and contamination, and loss of outdoor recreation opportunities.
  • Habitat loss is chief among these impacts, and it is recognized as one of the most critical threats to many wildlife species; building utility-scale energy plants adds to the problem.  The Ivanpah Solar project alone destroyed nearly 5.6 square miles of amazing desert wildlands, and now burns birds and insects in super-heated air created by its mirrors.   First Solar is now adding to the destruction in the Ivanpah Valley, bulldozing several more square miles of an important desert tortoise habitat corridor, and one of the company's two projects has already displaced over 150 of the the beleaguered animals.  It is difficult to put a monetary value on this destruction, but both companies have paid a total of tens of millions of dollars in a failed attempt to compensate for the destruction.
If you want to follow the CPUC proceeding (known as "R1407001") you can read documents and subscribe to receive e-mail updates here.  CPUC is expected to determine a value by December 2015, but you can see above that important decisions are being made much sooner. 

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