Clean Power

Published on September 14th, 2011 | by John Farrell


Could California Save 30% or More on Solar Power?

September 14th, 2011 by  

The Golden State has covered over 50,000 roofs with solar PV in the past decade, but could it also save 30% or more on its current solar costs?  Renewable energy guru Paul Gipe wrote up a study last month that found that Californians pay much more per kilowatt-hour of solar power than Germans do (accounting for the difference in the solar resource). The following chart outlines the various ways Californians pay for solar, compared to the Germans (averaged over 20 years, per kilowatt-hour – kWh – produced).

The German feed-in tariff (FIT) pays an average of 24 cents per kWh over 20 years for solar, but the combination of federal, state and utility incentives for solar PV in California have residents paying 33-38 cents per kWh.

While the study doesn’t explore the rationale, here are a few possibilities:

  1. The inefficiency of federal tax credits artificially inflates the cost of U.S. solar.
  2. Big banks that offer financing for residential solar leasing routinely overstate the value of the systems, increasing taxpayer costs on otherwise cost-effective systems.
  3. The complexity and intricacy of the state and federal incentives (4 separate pots of money!) and the lack of guaranteed interconnection means higher risk and higher cost for U.S. solar projects.
  4. The inconsistency in local permitting standards that increases project overhead costs.

Ultimately, the combination of these market-dampening problems in the California market has hindered the cost savings that have hit the German market.  Prospective California solar installations of 25 kilowatts (kW) and 100 kW have a quoted price of $4.36 and $3.84 per Watt, respectively, according to the Clean Coalition.  This compares to $3.40 per Watt on average for already installed projects of 10-100 kW in Germany.

Given the solar cost disadvantage presented in both the value of incentives AND in the actual installed cost, renewable energy advocates in California should seriously question whether the current policy framework makes sense. The mish-mash of federal tax credits and state/utility rebates has not led to the same economies of scale and market maturity as Germany has accomplished with their CLEAN Contract (a.k.a. feed-in tariff).

Switching energy policies could save ratepayers billions.

A 24-cent CLEAN contract price for California solar (to match the German contract) would replace the entire slate of existing solar incentives with an overall average cost 30% lower than the current combined incentives.  If 2011 is a banner year and the state sees 1 gigawatt (GW) of installed capacity, the savings to ratepayers of a CLEAN program (over 20 years) would be nearly $3 billion.

If the CLEAN price were adjusted down to assume that projects could use the federal tax credit, then California could set the contract price as low as 18.5 cents per kWh, 5 cents less than is currently paid by California ratepayers (although requiring projects to use tax credits has significant liabilities).

Several states and municipal utilities (Vermont; Hawaii; Gainesville, FL; and San Antonio, TX) have already shifted to this simple, comprehensive policy, with promising early results.  Californians should consider whether holding to an outdated and complicated energy policy is worth paying billions of dollars extra for solar power.

This post originally appeared on Energy Self-Reliant States, a resource of the Institute for Local Self-Reliance’s New Rules Project.


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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 (, and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at

  • Jim

    John, The answer is YES! Solar will bring it below current grid parity even in the hydro-assisted Pacific Northwest.

    We are honored to have been selected as Semifinalists in the Clean Tech Open, the largest clean tech contest. They are helping us to bring our solar encasement system to market. It is designed to allow virtually all solar manufacturers to have their products encapsulated in a ‘sandwich’ resulting in a BIPV roof at below the cost of a non-solar roof BEFORE tax credits/rebates/incentives. For hi-rises, it will also be available as a structural supporting curtain wall; will cost far less than most current building exteriors; is very attractive; allows for the option of all six forms of solar, not just PV plus has a see-through glazing option; installs in less than 1/5th the time of most current systems; predecessors have withstood over 200 mph winds in the Pacific; broke the test rack at 150 lb snow load; test show it will withstand a seismic 7 earthquake; is made primarily from agricultural waste; plus the surface material has been on my projects for over 30 years without breaking and with a almost imperceptible loss of delta. While designed to withstand heavy wind and snow, it is also designed for the easy removal of the top ‘slice’ for access and maintenance. Where light transmission rather than sight is desired, part of the ingrained lens system allows for balanced light transmission based on the time of the year so as to almost flatten the heat generation curve.

    This system is the result of heavy pressure from a DOE director for us to bring the BIPV portion of our transformational construction systems to market first “for the good of America. It needs it NOW!”. With biomimicry for natural cooling and ingrained lens to increase the output of the solar cell as well as allow for facing most directions including vertical, upon seeing a mockup, 4 NREL technicians got in a very heated argument as to how much it will increase a single cells output. They finally agreed to disagree with the lowest figure being 4 times, two were in the mid-twenties, and the fourth was at 40 times. Naturally they are anxious to get to work on it to obtain the right answer.

    Being part of a transformational construction system that simplifies the construction process, the solar portion will come as a light construction roof; a commercial/industrial roof that will span a typical city block at half the cost of a non-solar roof; a ground mounted system projected to cost less than 1/3rd that of current ground mounted; an awning system for residential as well as high rises; and two forms of retrofit for existing buildings.


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