LADWP Solar Plan Promises Cost-Effective Distributed Energy

By Published On: February 13, 2009

A Los Angeles Department of Water & Power plan to install 1,280 MW of photovoltaic generating capacity by 2020 is being criticized for its potential cost. However, an analysis released earlier this month shows it may be a good deal. The falling cost for solar systems is “a game changer,” said Jeffrey Peltola, LADWP acting chief financial officer. Discount prices could bring power from the massive program in at an average cost of 11.9 cents/kWh, a fraction of what solar power historically has cost. The department sent the analysis--performed for the muni by Huron--to the Los Angeles City Council February 2 in advance of a February 10 subcommittee hearing on the solar plan. The muni’s solar program would cost between $1.1 billion and $1.6 billion, LADWP general manager David Nahai told the council. According to the Huron assessment, it would add only 75 cents to $1 a month to the average customer bill, he added. Neighborhood activists compared the Huron study to the methods used to justify sale of mortgage backed securities backed by sub-prime home loans. “Playing Monte Carlo with a large project is not reasonable,” said Clyde Williams, a city resident and neighborhood council activist, referring to the study’s use of stochastic analysis, a statistical method sometimes known as Monte Carlo analysis. Advocates for the plan maintain that solar thin film technology is changing the landscape when it comes to the cost-competitiveness of solar energy. They add that now is the time to install solar systems when lower gas prices are giving the department room to move with existing money. The Huron assessment found that the cost of solar has gone as low as $3.50 per watt--down from what the muni expected at $7.50/watt. That’s the price that Southern California Edison is paying for massive solar systems it is installing on warehouses in its service territory, Huron said. Edison wants the California Public Utilities Commission to authorize 250 MW of solar capacity on such huge rooftops (Circuit, Dec. 2, 2008) The lower cost of solar stems from new thin film technology, which is opening a new strategy for achieving the state’s renewable portfolio standard, said Bill Powers, Border Power Plant Working group chair. Until now, he said, the presumption has been that utilities would focus on large, remote renewable energy projects to ramp up green energy. “All that has changed,” said Powers. Utilities now can use rooftops to install thin film panels in large quantities at an affordable cost and avoid the need to permit, finance, and build transmission lines and perform lengthy environmental analyses for big projects. He added that solar systems within utility distribution areas have the potential to unload existing transmission lines that now bring fossil fuel power into California cities. In many cases, this would open up lines to bring in renewable energy without adding as much new transmission to tap distant wind, solar, and geothermal resources. LADWP’s solar plan has three major components: 400 MW of LADWP owned capacity if city voters pass Measure B on March 3; 500 MW of utility scale systems built in desert locations; and 380 MW of customer owned systems. Most of the 400 MW of department-owned systems would go within the utility’s service territory to minimize the need for transmission, according to Mike Webster, muni renewable portfolio standard manager. The department envisions placing the systems on city owned properties near sub-stations where power can be injected into its distribution grid to balance peak loads. If Measure B passes, the department plans to begin installing the 400 MW in 2010 at the rate of a megawatt of capacity a week. The rate would ramp up to two megawatts a week by 2013 until all of the capacity was installed some time in 2014. In the customer based portion of the program, the department plans to offer a “feed-in tariff” for up to 150 MW of capacity, plus offer 100 MW through a “SunShares” program. Under the feed-in-tariff, the department would pay a standard fee to solar system installers. Through Sunshares, customers in multiple unit dwellings and those who cannot afford a rooftop solar system could purchase “virtual” solar energy. Another 130 MW would be installed with the help of departmental rebates to residential and business customers under the California Solar Initiative.

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