About the House: A Little Green Legislative Update

By Matt Cantor
Thursday December 10, 2009 - 09:45:00 AM

Well, we’re moving along. It’s taken far too long, but things are looking up, and those things are photovoltaic solar panels. 

About six weeks ago, Conan the (not quite) Republican, signed into law two bills that will surely change things a lot in this state, and PG&E is none too happy about it. They fought that legislation hard. On their side, they successfully thwarted the passage of two additional bills that would have made things better still, but let’s count our winnings before we lick our wounds, or at least before we mix our metaphors. If you’ll bear with me, I’ll give you a complete tally of the good, the bad and the indifferently greening of California. 

The first and most important bill passage was AB 920. The bill was supported by Environmental California (those people who keep coming to my door asking for money; looks like they done spent that money pretty darned well) and brought to the legislature by a young assemblymember from District 6 named Jared Huffman. Huffman, a former World Champion USA volleyball star and former director of Marin Municipal Utilities District (a publicly appointed position he held for 12 years) is having a good career, and it just got a lot better. This is the stuff that governorships are made of. 

The bill is very complex, and even reading the Legislative Counsel’s Digest made me want to climb under my desk and hide, but it appears as if, assuming one completes a course in economics from Yale, that as of Jan. 1, 2011, your electrical provider will be required to pay you back for extra electricity that you generate, just as if you were one of those big, nasty electrical generating facilities.  

The German government has been doing this for years, and those of you who have been reading your birdcage lining for some time will remember that the German government was, several years back, paying its citizenry at a rate roughly eight times their own cost for power generated on their roofs. This created a real solar fever, and solar panels were flying off the shelf at about nine times that of ours. In a country one third our population, that means their sales were essentially 27 times that of ours on a per capita basis. Clearly, allowing people to make money by generating power is a major inducement (duh!), and something our environmental community has been fighting for, lo, these many years. 

The specifics of how one will be paid (time of use issues, etc.) is not clear. The devil is always in the details and nothing in my reading has yet shown me precisely how these calculations will be made. What was clear was that the legislation intends to treat homeowner-earners the same as all other earners of solar power, and this seems quite a good thing from my substantial distance. 

The second bill to pass was SB 32. Germany keeps coming up in my research because the German people have taken green very seriously and for a very long time. It’s also good to remember that Germany is the number one export economy in the world, so, apparently, being green doesn’t mean you can’t make lots of money. I suspect it does require a more level distribution of wealth and this is also true for Germany. SB 32 is the grandchild of the German Renewable Energy Sources Act, which helped to define a “feed-in tariff” (which is what SB 32 is).  

A feed-in tariff is a set of economic mechanisms designed to encourage the development of environmentally friendly energy generation and use. The European Commission has said that “well-adapted feed-in tariff regimes are generally the most efficient and effective support schemes for promoting renewable electricity.”  

Using mechanisms known as “tariff degressions,” energy rates are initially mandated at a higher rate for various green energy sources (photovoltaic, wind, wave, etc.) to compensate for the start-up costs and gradually decrease as the source becomes more economically viable and able to compete on its own. 

In short, this new bill will adjust rates for various green providers so that they can begin to compete and pay for their equipment over a course of years (20 keeps coming up at number, but this is a graduated system in which new green generators are encouraged to start standing on their own as early as possible). 

So bully for Gloria Negrete McLeod (who authored this legislation), our state senator from Chino and a great grandmother of 15! 

Sadly, Senate Bill 14 was vetoed by the Governator. This bill, authored by Senator Joe Simitian of the 11th district, among others, would have required that energy service providers (ESPs, no joke; doncha love it?), publicly owned utilities (POUs) and investor-owned utilities (IOUs; you can’t write this stuff) buy at least 33 percent of their energy from renewable sources (wind, geothermal, solar) by 2020.  

Now, the current standard demands that by the end of next year, we reach 20 percent and with another 10 years to go another 13 percent. It’s a sorry condition in which we can’t manage to make a set of improvements as meager as this in another whole decade. How many more glaciers will have melted by this time? Where will sea level be? It’s clear that the United States is lagging far behind the E.U., which just this last year voted to stop manufacturing all incandescent lighting, as well as most of the remaining industrialized world with respect to these vital metrics. Assemblymember Paul Krekorian’s AB64, a companion to SB 14, was also vetoed by Arnold at the same time. The bill is essentially the same as SB14. 

I’m really quite thrilled to see these first two bills going through because it means several things. First, it means that there is no reason not to buy, allowing for some delays in income, a photovoltaic solar generating system of any size for your home. Previously, I have been inclined to tell my clients that buying a system that is too large would be nice for PG&E but not so nice for you. This will no longer be true as soon as AB 920 is in force just over a year from now. It is also likely to mean that you’ll be able to make a fair amount of money off whatever you don’t use yourself since you will be generating at peak-income time (midday) and using power mostly at low-rate time (evening). For those of you who read from a distance and have those air conditioning machines we, in Berkeley, read about, you’ll use a fair amount of current running those darned things, but, aside from these, most people should be able to earn at a much higher rate than the price they buy at. This is how you pay and will therefore be how you will earn, if the legislators have done their job properly. 

Another thing that this will mean is that there will be more power generated on larger scales than what you and I can provide as induced by the new rules in both AB920 and SB32. We will certainly be seeing strip malls and Home Depots covered with solar panels, and, perhaps, lots of wind turbines atop local hillsides. Where money can be made, someone, probably lots of someones, will show up to make that money, and while the 33 percent mandate of our two failed bills may not be there to push us forward, the alternate mechanisms in our two triumphant bills may do much to produce the same result. 

Lastly, as more panels sell, we are likely to see more competition in all parts of the market including installation costs as well as equipment cost. Is it time for you to take a second look at the cost of solar on your roof? If you’re a commercial building owner, it is time to talk to your financial planner about investing more in your own building and energy future? I think you know how I’d answer the question.