Jerry Brown this week restated his campaign commitment to add 12GW of new distributed generation to California’s grid.
Most of it will have to come from rooftop solar. That’s not a problem in sunny California perhaps. But it’s a tall order given that the figures for distributed generation under the California Solar Initiative currently stand at around 1GW.
It’s also a challenge because solar developers in California are now tooled up for large utility-scale installations, fuelled mainly by the state’s aggressive Renewable Portfolio Standard target of 33% by 2020.
But Jerry Brown in his 70s, appears to be just as shrewd a governor as he was in the 70s, if recent accounts from renewables analysts are anything to go by.
The US has a lot to gain from looking at European models of renewable market growth, said Daniela Schreiber at EUPD Research.
At the recent Intersolar conference in San Francisco she gave a brilliant account of the risks of asymmetrical policy frameworks and argued that Renewable Portfolio Standards, with their emphasis on utility-scale installations, were not sufficient to create a mature solar market. As utility scale installations peaked, longer-term incentives were required to boost the domestic and commercial rooftop segment.
California still led the market in the US, with 30% of installed capacity, down from 80% in 2006, she said. Desert states in recent years have raced to install solar projects, and resulted in the massive growth for 2010 of 710% in New Mexico and 430% in Arizona.
But she said these growth rates were unsustainable and represented how little solar was installed to start with - New Mexcio only had 70MW of installed capacity in 2010, for example.
These growth rates can be partly accounted for by RPS targets, she said. But reliance on only RPS puts the market in a vulnerable position without long-term incentives.
“You may argue that this is not quite sustainable because if you look at what’s behind the framework certainly the RPS is important. But if you theoretically think what if that target is reached? What will be next? In the worst-case scenario, if no more improvements were done in terms of framework, that would mean that the market would die.”
Europe had learned some painful lessons she said: “This growth is not that sustainable. I can give you some European examples, Spain in 2008 was the market leader in terms of installed capacity. Once the target is reached, the market can be closed down. That’s what happened in Spain. Its market skyrocketed in the large-scale segment with average system sizes of 8MW and all of a sudden the government decided to stop it killed the market.”
The key to stabilizing markets would be smaller scale deployment, she said. “The residential and commercial rooftop segment however, is vital for sustainable market development. And this is something you can see in markets such Germany and Italy.”
Colorado had also succeeded in balancing its market too, she said. “Colorado has developed all segments – the residential segment and commercial segment, small and large-scale.
“But if you look at a less mature market in New Mexico there is huge growth in large scale segment.
“However, there is risk involved with large-scale only because smaller scale residential and commercial are considered to be more sustainable.”
She acknowledged that Europe faced pressing challenges over market stabilization now that FITs were winding down in Germany and other countries. But FITs still represent a proven stage in market development, but PV would become more of an energy generation proposition rather and an investment opportunity.
“Let’s face it we’re moving to a time when the feed in tariffs are slowing fading out. Where new market drivers come to the fore, self-consumption, energy production – not so much an investment case and that comes with much more market drivers that will impact the industry.
“There are a lot of question marks over what will happen in the next phase of PV meaning energy generation…”
Italy was still a growth area for FIT-driven projects, she said, despite fears the government was going to scale back quickly on its massively successful Conto Energia.
“Italy had a good last year in 2010. A lot of installed capacity - 2.5GW that will be connected this year plus they amended the Conto Energia. It came out a lot better than expected. So the limitation for the FIT is up to 1MW rooftop systems.
“That’s really good because it helps to address commercial segment – so the prospects for Italy are great. Natural conditions are great. FITs are still great so we still do see a good installed capacity in 2011. And also in 2012.”
Part of this growth was thanks to Italy cutting back on redtape – regulatory streamlining would be an easy improvement for something that the US which also needed to create more market certainty.
“Before there was a problem with the approval process, bureaucratic issues that hindered the market growth. In the US this is really a big, big problem. There are problems around financing and how stable is the framework?
Honestly, the FIT is the very important tool that totally fostered the market development in Europe. Regardless of the framework systems in the US which may absolutely work, it is important to provide security of a stable programme.
“In Europe, the PV market is moving toward commercial and residential as sustainable segments. Markets are so fragile and volatile because they depend on framework conditions in both Europe and the US.”
At his conference in LA this week, Brown railed against barriers to deployment of renewables such as permitting and public participation in democracy:
“There’s two regulatory hurdles - just getting a permit that could take a cookie cutter ordinance. Some 400 cities that could issue these permits which invite community participation. When you have 38m people [living in California] there is always going to be someone who says no.”
“Our system of participation means that any old fool can object to anything. But restricting participation has the feel of being undemocratic but you invite everyone no matter how benighted you wouldn’t get anything done.”
“[There is] a lot of distributed political power - we need base of arbitrary power to get over that.”
He vowed to make the regulatory authorities such as the California Public Utilities Commission, the California Independent Operator System and the California Energy Commission, work together to overcome problems such as complex and expensive permitting processes which varied in the state.
In San Jose a permit for domestic installation can be done over the counter, whereas the process was a lot longer and costlier in LA, Solar City pointed out during a panel discussion.
Brown said that the EU and China were leading on clean energy because its executive leadership were allowed “greater latitude” to execute and implement policies.
“If you are in Germany or China there are more eyes on the prize because those countries allow executive leadership more latitude. So many people in California can block things.
“Someone has to think long term and someone has the authority to execute that doesn’t please the immediate news cycle.
“The challenge is - can anyone anywhere in the public sector make a long term decision and make it stick?”
But I wonder if Brown has yet grasped the nettle: making any target stick, such as his ambitious 12GW goal, may well require new legislation… but that will take time.
Incentives through the CPUC may achieve quicker results… but can Brown convince the commission and utilities to make a common sense decision on FITs?