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Published on June 18th, 2013 | by John Farrell

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Three Key Features Of Los Angeles’ New Local Solar Program

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June 18th, 2013 by  

Officially launched in January after years of development, a new CLEAN (feed-in tariff) program from the Los Angeles Department of Water and Power (the city’s municipal electric utility) promises 100 MW of new local renewable energy by 2016. In absolute size, the program will be among the largest CLEAN programs in the US, but compared to the size of the population it serves, the new LA program ranks behind national leaders like Gainesville, FL, or Vermont (the city’s peak demand tops 6,000 MW). Even so, the Los Angeles program is a good example of a community increasing the capture of local energy dollars with local energy generation.

The official announcement of the Los Angeles program puts the total energy capacity for U.S. CLEAN programs over 1.3 gigawatts. The following table, updated from our 2012 report on CLEAN Programs, shows Los Angeles in the context of other state and local programs. Prices are normalized for the local solar resource and program contract length. Interestingly, the adjusted German price for residential PV (down 3 cents since the 2012 edition) is still better than most US programs, reflecting their ongoing cost advantage.

US CLEAN Programs 2013-0403

The LA program supports renewable energy projects (most likely solar) with a 20-year, fixed price contract at 17¢ per kilowatt-hour (kWh). Projects must be between 30 kilowatts (kW) and 3,000 kW, and the program will roll out in five, 20 megawatt (MW) phases every six months over the next 3 years. A full 20% of capacity in each phase (4 MW) will be set aside for smaller projects, between 30 and 150 kW.

The program has three distinguishing features from other CLEAN programs:

  • The price was set based on a pilot, competitively bid 10 MW program in 2012 that had an average accepted bid price of 17.5¢ per kWh
  • The 17¢ per kWh fixed price contract is adjusted based on the time of day and season of production. The time of day adjustments are likely to increase the per kWh payment to approximately 18.1¢ per kWh (based on sample data provided by LADWP)
  • The contract price will decrease automatically by 1¢ per kWh for each phase of the program, falling to 13¢ per kWh for the final 20 MW phase.

The time of day multiplier ranges from 2.25 for “high peak” demand on weekdays in the summer season to 0.5 for off peak energy (weekday evenings and weekends). The following chart shows the approximate per kWh payment for energy based on its time of production (for phase 1).

Los Angeles FIT Program TOD pricing

About a quarter of solar output falls into this high peak during the offseason, with approximately one-third of solar output coming during high peak in the summer. The end result is an average per kWh payment of 18.1¢ per kWh, about 6.5% higher than without the time of day multiplier.

The FIT program has three other good policy design features worth mentioning. The program limits participation to one project per property parcel, helping to widen the opportunity. Projects have 18 months to reach commercial operation (perhaps still a bit too long given the aggressive price declines in the industry), but lower than the 3 years in Ontario, for example, where premium contracts are awaiting fulfilment as profit-oriented developers wait to lock in ever-lower panel prices. The third is that while the queue for the program is “first come, first served,” projects that apply within the first 5 business days are treated as coincident, with a lottery selecting the winners from that pool. This helps community-based and smaller projects compete against large developers with the in-house resources to get the paperwork together.

The program may not make a huge dent in the city’s collective energy spend or its peak demand, but its design highlights the careful consideration of the policy and makes it a likely success.

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About the Author

directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.



  • JamesWimberley

    The table has an erroneous total for Germany. Total installed solar PV was 32.4 GW at the end of 2012. The 53 GW is I think the government’s target for solar PV, and the ultimate cap for the FIT. However the feed-in right is not limited (though at a negotiated not guaranteed price) and few expect the industry to come to a sudden halt when it hits the cap. By then, self-consumption (priced at Germany’s high retail rate) and feed-in of the balance at the wholesale rate will still make a lot of further installation worthwhile.

  • Michael Berndtson

    After reading this post and feeling good about electricity democracy, I recieved this article from Crain’s Chicago Business via feed:
    “How Comed’s rate design benefits suburbs over the city”
    http://www.chicagobusiness.com/article/20130615/ISSUE01/306159979

    [the article is for subsribers]

    In a nutshell, Comed subsidizes suburbanites with large homes and high electricity use over small homes and low energy users by offering lower rates to owners of McMansions. This is purely a move to not upset the “conservative” suburban and exurbanites and to keep nuclear and other always-on generating plants going – and make Exelon (Comed’s parent) a pile of cash. Could you imagine the uproar if all customers had to pay the same rate for usage via smart metering? Oh, wait in the Chicago wealthy suburbs there was already an uproar. My close in suburb (with small 1200 square foot homes, two flats and apartments) was chosen as a pilot program for smart meters and real time usage tracking. Of course the wealthy suburbs to the west and north of Chicago fought the expansion of Comed’s plans – I’m assuming for this exact reason.

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