Utilities Overwhelmed by Solar Rebates

The rebate program for large photovoltaic projects attracted unprecedented levels of participation in spite of the drop in the per-watt subsidy this year. Applications for the current round of buy-downs for commercial renewable self-generation projects 30 kW or larger, paid for with ratepayer funds, have flooded into the three investor-owned utilities of late. "PV is going bonkers," said Tom Geldner, director of marketing for the San Diego Regional Energy Center, which handles the program for San Diego Gas & Electric. Pacific Gas & Electric, SDG&E, and Southern California Edison began accepting applications for 2005 funding on February 1. That first day, PG&E received 315 applications for photovoltaic rebates. "This far outpaces any other year," said Paul Moreno, spokesperson for the utility. On top of that, 84 applications had been wait-listed from last year, 64 of which are the first in line for this current round of funding. The newly submitted projects, plus 11 additional ones that came in, represent $285 million in potential incentives. Edison received more than 100 applications by midafternoon on February 1. About 30 projects that didn't receive funding last year are being carried over. In San Diego, 52 applications came in at the beginning of the month, added to 57 photovoltaic proposals on the waiting list. The 57 projects alone are estimated to cost $51 million-far more than available funding, according to Geldner. PG&E and SDG&E adopted novel approaches for prioritizing projects seeking funding this year. They held lotteries, ranking projects according to the order in which they were pulled out of a hat. Edison, unlike its neighbors to the north and south, expects to fund all viable projects because of its high attrition rate. According to the utility, about 50 percent of the projects fall by the wayside. To date, not one bona fide applicant has been turned away, with all being wait-listed, said a source at Edison. PG&E's attrition rate is about 40 percent, while San Diego's is far less. The subsidy for large commercial photovoltaic projects was also popular last year, with applications outstripping available resources. PG&E, for one, stopped accepting applications early in the game because of the overload. As a result, the program's popularity led PG&E and the two other utilities to reallocate funds from other areas of the renewable self-generation program that were not in such high demand. Reallocations by all three utilities, which are permissible under the legislation creating the program in 2001, are expected again this year. The alternative self-generation program has been used to fund solar photovoltaic projects installed in a wide variety of businesses, including grocery stores, high-tech facilities, universities, city buildings, water and wastewater districts, and a forensic lab. Last year, out of $52 million PG&E allocated for the large clean self-generation projects, a little over $41 million went to 87 PV projects, Moreno said. This year, funding is expected to decrease to about $35.5 million. Over the last three years, PG&E has paid more than $62.5 million for 143 solar power projects. In Edison territory, photovoltaic and wind projects are currently funded at $9.75 million, according to spokesperson Marlon Walker. The new amount of funding will soon be posted on Edison's website, he added. In 2004, the San Diego energy center committed $8 million to 21 photovoltaic projects, along with one cogeneration facility. Out of the nearly $14 million in total funds, San Diego has allocated $4.65 million for PV projects so far, Geldner said. In addition, 77 active PV projects have or are guaranteed funding. The California Public Utilities Commission allocates among the three IOUs $125 million annually for the self-generation incentive program-including, but not limited to, photovoltaic projects. At the end of last year, the program was altered, with the subsidy for photovoltaic projects dropped to $3.50/watt. Previously there were two funding formulas: qualifying project applicants could receive up to $4.50/watt or 50 percent of the project cost, whichever was lower (see sidebar). In addition, eligible projects were expanded from a maximum of 1 MW to 5 MW. Lessons Learned The nonprofit San Diego Regional Energy Center has been running the self-generation incentive program for San Diego Gas & Electric since its inception in 2001. The California Public Utilities Commission created this third-party administrator, which runs other CPUC programs as well, as an experiment. In the energy center?s first three years, the organization found it difficult to verify the cost of solar rooftop and other solar-powered projects that were getting subsidies. The corroboration problems came in attempting to administer the old formula when applicants wanted payment on the 50 percent of total project cost option, instead of taking the $4.50/watt subsidy. Countless administrative hours were spent trying to verify individual project details, said Tom Geldner, the San Diego regional center?s director of marketing. The organization claimed that the change in formula late last year will ease verification.

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Utilities Overwhelmed by Solar Rebates

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