By Bonnie Hulkower
Los Angeles, a city more often known for its celebrity sightings and Hollywood stars, also shines bright in the solar arena. The City of Angels has dazzled in the last decade with a strong record of sustainability. So much so that on April 19th, local and national government representatives as well as business leaders gathered to celebrate the launch of the city’s solar Feed in Tariff (FIT) program (Clean L.A. Solar Program) at the Los Angeles Business Council’s (LABC) Sustainability Summit. The program focused on how to harness sustainability programs and regulatory initiatives for job growth.
Essentially, the idea of the FIT is to make solar competitive in what naturally is one of the nation’s sunniest communities. Similar to President Kennedy’s mission to the moon, L.A.’s moonshot moment is to benefit from solar energy in a region blessed with sunny weather year round. Solar energy is especially appropriate in hot climates, as air conditioning demand coincides with the period of peak solar radiation.
L.A.’s FIT program will be the largest municipal commitment to solar, but not the first. Less sunny regions of the world, including Germany, have had FITs for more than a decade now. Germany’s FIT program allowed it to become the world leader in the solar industry. Germany’s program started at the municipal level and then later was adopted on a national level. As of December, Germany has a PV solar capacity of more than 32.3GW, much more than the U.S. despite being a fraction the size of the U.S. The most robust part of the job picture in Germany is in the renewable sector. The largest renewable companies are based in Germany because of the certainty of conducting solar business there. Solar power in Germany is now 30 percent cheaper than conventional power.
The success of Germany’s program has inspired other regions to follow. Gainesville, Florida was the first city in the U.S. to adopt a FIT program, and other cities in CA such as San Jose, Bakersfield and Fresno have also adopted FIT programs before L.A. in part due to the state of California’s law that utilities must offer FITs for their share of the 750 MW state target. L.A.’s FIT program officially began on February 1st 2013 and is now the largest program FIT in the U.S.
For all of its dazzling prospects, a feed-in tariff is not a very sexy name. (Some confuse it with net metering.) What FIT has over net metering is that the programs guarantee those producing solar energy a certain premium price per unit of electricity over 10-20 years. This stability and certainty allows the owners to anticipate recouping their investment. It also spreads the costs of renewable across all customers of the utility, so it adds only a few cents a month to the average family’s electricity bill. Eventually, it will make it easier to decentralize from the grid. It will also make customers less vulnerable to brownouts.
L.A. City Council voted on the program administered by L.A.’s Department of Water and Power in April 2012. In July 2012, LADWP reviewed 26 bidders to sell solar power at the price set by the FIT program. The program is currently in a pilot phase that starts with 20MW for every six months. The FIT provides a strong incentive for small-scale installation of rooftop solar. Successful bidders could earn 17 cents per kWh by selling the solar back to DWP. The plan is to have that price come down one cent with each six-month solicitation, assuming LADWP sells out at each phase, which seems likely since they received applications for over 100 MW in response to the first solicitation. The program is projected to expand to 150 MW by 2016 and potentially to 600 MW by 2020.
Program critics have had issues with the minimum program required of 30kW, as most individual household rooftop solar could only provide 3-5 MW. This makes the FIT program out of reach for the majority of LA residential property owners, as even if they installed solar, it would not provide the 30 MW to qualify. Therefore, the program is really more geared toward commercial properties and multifamily residential, such as warehouses, schools and parking lots. Still, most have heralded the program as a way to spur the industry, with a very small cost of 4 cents added to the average family’s monthly electricity bill.
One of the speakers at the Summit was Christian Wentzel, CEO and Founder of the Solar Provider Group. He recently relocated his company’s headquarters from Germany to Downtown L.A. Wentzel was enticed by the stability of the FIT program. His company is actively hiring people with MBAs, construction managers and electricians. At 150 MW, the FIT program is anticipated to create 4,500 jobs in L.A. and could power 34,000 homes.
Most of L.A.’s renewable power is generated outside of the city and then transmitted hundreds of miles back to the city. Within the city, L.A. has underutilized roof space and abundant sunshine –an excellent resource for rooftop solar.
As Angelenos look forward to sunny beach days ahead, they also should celebrate the city’s FIT program. It is a bright example for other large cities across the U.S. to aspire to follow.