Published on April 1st, 2013 | by Silvio Marcacci4
Shared Renewables Could Supercharge California’s Clean Energy Economy
California’s clean energy economy is already America’s largest, but two bills making their way through the state legislature could open access to renewables for millions of utility customers – without any subsidies.
If passed, SB 43 and AB 104 would allow the 75% of California utility customers who can’t install their own on-site generation to subscribe to “shared” renewable energy projects of up to 20 megawatts (MW).
Advocates say a 500MW shared renewables pilot program within the state’s three largest utility service territories would create 7,000 green jobs, earn $60 million in state sales tax revenue, generate $2 billion in economic activity, and voluntarily surpass the state’s 33% renewable portfolio standard.
Even though renewables are the fastest-growing source of new electricity generation, millions are unable to join the clean energy economy because they don’t own their home or business, because their locations aren’t suitable for distributed generation, or because they can’t afford to finance the installation.
So How Does It Work?
Shared renewables would flip that paradigm and empower customers of investor-owned utilities to directly support new clean energy generation by generating utility bill credits for electricity produced at a shared renewable energy project.
The concept is relatively simple. First, a developer builds new renewable generation and signs up subscribers who choose how much of their power demand to offset from the project. Subscribers can enter into a set-price contract for up to 100% of their electricity demand over 20 years with the developer if the fixed price is less than their current rate.
Then, the regional utility tracks the volume of electricity generated by the shared project and sent onto the grid, gives the subscriber a credit at a price set by state regulators, and subtracts that credit from the subscriber’s monthly electricity bill.
Avoids Controversial Energy Issues
California shared renewables could directly address two of the most controversial issues facing renewables – subsidies and net metering. Since a subscriber’s monthly credit offers the utility a fair rate for grid use, the program won’t shift costs to other ratepayers. And, since shared renewables are designed to attract private investment and be paid for by subscribers, new projects won’t need state incentives.
The system could also avoid controversy around net metering, which has been opposed by utilities because they have to pay customers for electricity generated but not consumed on site from small-scale projects. Since shared renewables are located offsite, subscribers still pay to use the grid and do not directly offset electricity demand from the utility with customer-generated supply.
Locks In Long-Term Savings
Perhaps best of all, shared renewables could help customers save money and improve disadvantaged communities while protecting the environment. California regulators expect electricity rates to rise 2.7% per year through 2030, but by locking in competitive price contracts now, subscribers can hedge their utility bills for up to 20 years.
Two local case studies show the benefits of shared renewables. The City of Davis, home to 65,000 residents and the most sustainable college in America, would save more than $2.8 million over 20 years while reducing greenhouse gases by 33,484 metric tons per year. A bit further to the west, the Bay Area Unified School District, which serves 29,000 students, would save $1.5 million in energy costs – a big help considering its budget has been cut $40 million over the past four years.
Both pieces of legislation also contain a 20% set-aside for residential subscriptions, and a 20% set-aside for renewable projects smaller than 1MW to be built in areas disproportionally affected by environmental pollution or with socioeconomic vulnerability.
Go West, Young Solar Campaigner
So once again, California is at the vanguard of renewables policy in America. Seven states have now passed shared renewables legislation, and campaigns are currently underway to expand or pass similar laws in six states and the District of Columbia.
Already the epicenter of third-party home solar, if shared renewables work in the Golden State, clean energy campaigners may have another model to consider when setting policies that put us on the road to a sustainable future.