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LOS GATOS, California, US, September 7, 2005
(Refocus Weekly)
The state of California could save US$6 billion
as a result of its ‘Million Solar Roofs’ initiative, according to a
solar company.
Although California Senate Bill #1 would cost $3 billion to
implement, it will provide $9 billion in benefits, says Akeena Solar
in its white paper, ‘Economics of Solar Power for California.’ Those
savings include $7 billion in energy infrastructure, $1.5 billion in
economic savings (jobs and taxes) and $525 million in environmental
savings, for a net benefit to the state of $6,107 million.
The legislation is supported by governor Arnold Schwarzenegger, and
calls for installation of 3,000 MW of solar electric panels
throughout the state by 2016. The Akeena analysis says the major
savings will come from avoiding traditional power generation and
distribution investments, and savings may be substantially higher if
fuel prices escalate faster than 3%.
“The primary benefit of the Million Solar Roofs Initiative is that
it reduces California's power needs during hot summer weekday
afternoons," says president Barry Cinnamon. “Without this 3,000 MW
of solar capacity, utilities must construct this generation,
distribution and transmission infrastructure - as well as operate
and fuel these plants.”
“Ratepayers will ultimately pay for these costs,” he explains.
“Solar power is a far better way to generate this capacity since the
state also benefits with cleaner air and a better economy.”
“The total benefits to California are dependent on the number of
solar systems installed, which is directly affected by the
combination of incentive funding necessary to generate this level of
demand,” the paper explains. “The Million Solar Roofs Initiative is
indeed achievable within ten years, with the level of incentive
funding set in each solar market segment to maintain the necessary
overall market growth rates.”
The current state incentive of $2.80 per watt and a tax credit which
expires in December for residential new construction and retrofit
installations “are insufficient to generate the necessary market
growth,” and the Akeena report suggests a rebate of $22,354 for a
residential retrofit that would cost $40,204 in total, to provide a
payback of 13 years. For new residential installations costing
$14,927, an incentive of $7,653 would provide a simple payback in 14
years.
In commercial installations costing $697,000, the incentive would be
$385,275 and, for government systems costing $1,394,000, the
incentive would be $720,000, suggests Akeena.
“There are currently two major challenges facing the adoption of
SB-1,” it explains. “The first challenge is that certain unions want
all of the solar work in the state to be done using ‘prevailing
wages’ - essentially union wages,” and Cinnamon says that demand
would increase costs to the state by $750 million.
The second challenge is that SB-1 replaces conventional generation
and distribution by utilities, which will want to continue providing
incremental power to their customers. “It is only by installing
these systems on business and residential rooftops that costs for
additional transmission and distribution systems can be avoided,”
the paper explains.
A key concept of the analysis is that customer economic behaviour
drives the solar market and, “assuming a level of incentives that
does not take into account actual customer purchasing behaviour
(based on net customer economics) will result in fewer systems being
installed within the ten-year timeframe of the Million Solar Roofs
Initiative,” it adds. “Specifically, continuing the current schedule
of declining incentives will not result in market growth and, in
light of current module shortages and price increases, may cause the
market for new solar electric systems to actually shrink.”
Akeena Solar was founded in 2001 to install solar PV systems in
California, New Jersey, New York, Connecticut and Pennsylvania.
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