News


Locals aren't buying Palo Alto's newest green-energy program

Palo Alto CLEAN asks property owners to sell solar energy to the city

Palo Alto may be land of the green and home of the tech-savvy, but the city's latest renewable-energy program has so far failed to achieve even a spark of participation from local customers, forcing officials to go back to the drawing board.

The program, dubbed Palo Alto CLEAN (Clean Local Energy Accessible Now), gives local companies with large rooftops a chance to sell energy generated by solar systems to the city's Utilities Department. In launching the program in March, the city hoped to get about 4 megawatts of solar energy from local rooftops through this program, enough to power roughly 1,250 homes. At its March 5 meeting, the City Council swiftly and enthusiastically approved the new program, with Councilman Pat Burt calling it a "fulfillment of what is overwhelmingly a desire in our community to have very clean and competitive electricity" and "an excellent example" for other utilities to emulate.

But things haven't quite panned out as planned. As of this week, not a single company has applied to be the city's energy supplier, and utilities staff is looking to make changes to the program's design in hopes of spurring more excitement from developers of solar technology and companies with large rooftops. Staff plans to return to the council this fall with suggestions.

The lack of participation does not indicate a lack of interest in the new program, said Jon Abendschein, a resource planner at the Utilities Department. Twenty to 30 developers and site owners have contacted the city to inquire about the program in recent months. Ultimately, the math just didn't pencil out for them, he said.

"A number of them felt sure going into the process that they'd make it work," Abendschein said. "After running the numbers, we started hearing from some that the price just wasn't sufficient to make the project worthwhile."

The proposed price for electricity is 14 cents per kilowatt hour for a 20-year contract, 13.2 cents per kilowatt hour for a 15-year contract and 12.4 cents per kilowatt hour for a 10-year contract. The department based the price on how much it would cost the city to buy and transmit renewable energy and added additional 0.45 cent per kilowatt hour as an incentive for local site owners to participate.

In creating Palo Alto CLEAN, the city sought to create a feed-in-tariff program that would have very little or no impact on local electric rates.

At the March 5 meeting, Burt noted that the feed-in-tariff mechanism is common in Europe and said the rate structure in the city's new program "probably has the lowest rate impact on ratepayers of any feed-in tariff program anywhere."

But now, it looks like the two goals -- keeping rates low and getting companies to sign up -- are at odds. Abendschein said other cities have offered much higher rates to companies willing to install solar technology in their territories and to sell it to the utilities. Palo Alto isn't ready to do that, he said.

"Our goal is to see whether it's possible to get some of our renewable energy from local sources without paying large incentives," he said. "We wanted to see if we're able to do that without ratepayer impact."

The city's history has given officials plenty of reasons for optimism. Palo Alto boasts the nation's top-ranked renewable-energy, PaloAltoGreen, in which participants volunteer to pay extra for renewable energy. Another program, PV Partners, allows any customer to get rebates from the city's Utilities Department for installing photovoltaic technology. Abendschein said more than 400 customers participate in this program and noted that the city already has more than 3.5 megawatts-worth of solar equipment installed, enough to provide energy to about 1,000 homes.

Then there's the city's overall reputation. Palo Alto boasts some of the nation's leading green companies, including Tesla and Better Place (which specialize in electric vehicles), and a wealth of environmental nonprofits and small startups dedicated to getting people to reduce energy use and support renewable power.

But the new Palo Alto CLEAN program is in some ways more radical and exclusive than the city's previous offerings. So far, it is only being offered to commercial customers with solar systems on large rooftops (about 25,000 square feet of rooftop space), which excludes the vast majority of potential participants. Last year, Palo Alto had 27 commercial customers with photovoltaic systems of any size, the Utilities Department reported.

Abendschein said one of the things staff will evaluate before it brings the program back to the City Council for modification is whether to expand the eligibility criteria.

"We will be looking to see if there are ways to facilitate participation without raising the rates," he said.

Craig Lewis, executive director of Clean Coalition, a Palo Alto-based nonprofit organization that helps utilities develop feed-in tariff programs, attributed the lack of participation chiefly to the rate structure and the current market for renewable energy. The developer community is sending a signal to the city that 14 cents is too low a rate at this point in time, Lewis said.

"What the market is telling us now is that the price that's going to keep the rate neutral is too low for the cost of deploying solar projects today," Lewis said. "I'm confidant that if the program is in existence for a long enough period of time, say another year, the price will be there."

Lewis said Palo Alto CLEAN offers a rate that is among the lowest in existence for utilities with feed-in-tariff programs. The new program just launched by the Long Island Power Authority, for example, offers a fixed rate of 22 cents per kilowatt-hour for 20 years.

The Sacramento Municipal Utilities District, meanwhile, unveiled its program with a rate structure similar to Palo Alto's. Its program filled up immediately, and it currently isn't accepting applications.

One major difference between Sacramento's program and Palo Alto's is the nature of solar technology. While Palo Alto limits its program to roof-top solar panels, Sacramento allows ground-based, "tracking" solar technology, in which solar panels follow the sun and generate about 25 percent more energy than "fixed-tilt" rooftop panels, Lewis said. This suggests that Palo Alto would have to raise solar buy-back rates by about 25 percent to give local developers an incentive that is comparable to the one offered by Sacramento. At the same time, because Palo Alto is relatively small, largely built-out and boasts astronomical real estate rates, building ground-based solar projects isn't as cost effective here as it is in other parts of the country.

Raising rates would be the easiest way for Palo Alto to spur participation, but it's not the only one, Lewis said. One idea that his organization is promoting is installing solar equipment at city facilities such as buildings, garages and parking lots. Developers would be invited to install the solar panels on city land and sell energy to the city for 20 years, after which time the city would take ownership of the equipment.

"This essentially allows the third-party developers spaces to build on without having to worry about increased costs that they'd have to pay through lease payments," Lewis said. "We think the city making its properties available is a really easy way for the city to make the program more attractive."

Lewis also said his group is committed to helping the city reach out to potential developers. The Clean Coalition is now looking to organize a community meeting to educate property owners about Palo Alto CLEAN.

"At the end of the day, we're really talking about putting these solar projects on built environments, whether rooftops or parking lots," Lewis said. "You need to have the property owners participating."

Comments

Posted by PA A/E, a resident of Adobe-Meadows
on Aug 19, 2012 at 10:04 am

Our building is located in Transit/Commercial side of San Antonio and we have a large roof suitable for this type of solar installation.

We were NEVER contacted by anyone at the City to participate in the program.

If our experience is similar to others in town...the lack of outreach doomed this program.

Just turning on a web page is not outreach.


Posted by rhonda, a resident of Midtown
on Aug 19, 2012 at 11:08 am

Palo Altans are always big talkers when it comes to the environment, claiming they care so much. But only 20% of residents have agreed to pay higher rates for green energy from the city. That statistic says it all for me -- that 80% of the community doesn't buy in to this sustainability crap that the city is constantly trying to force down our throats.


Posted by Sam, a resident of Midtown
on Aug 19, 2012 at 12:54 pm

How is it possible that Larry Klein did not sign sign up for this deal? He could have offered his business building roof top for solar panels. He claimed to be very excited about the approach of feed-in tariffs ( Web Link )

Talking green and walking green are not the same thing, apparently.


Posted by Waste of money, a resident of Midtown
on Aug 19, 2012 at 2:31 pm

Everyone has the same energy from the same sources in Palo Alto. If you sign up for "green energy" you simply pay more; that's why residents aren't going for this teaser, we're too smart.


Posted by Bob, a resident of Community Center
on Aug 19, 2012 at 5:31 pm

The ranks of Palo Alto City employees are filled with a surplus of highly paid employees with high sounding titles who are dreaming up exotic plans and mandates for the residents to justify their positions. In order to save money, why not get rid of all non-essential employees and their staff and their far out ideas and concentrate on what's basically important. Most of these people,I'll bet, don't even live here.Frankly,I'm sick and tired of "City Hall" telling me what I can and cannot do .
Start cleaning house in the Planning Department and the Utility Department - and the city manager's floor. Anyone else 'fed up'?


Posted by Mark Burns, a resident of another community
on Aug 19, 2012 at 9:25 pm

I don't know the program. What if the city paid for the installation and maintenance; had rights to all the electrical generation; and paid a royalty of 1-3 cents per kilowatt. Is there more to this?

OK . . . Make the city promise to use the profit/net revenue for public safety and road maintenance only. No new programs; just the job a city government is supposed to do.


Posted by Petroleum-Powers-The-World, a resident of Another Palo Alto neighborhood
on Aug 20, 2012 at 7:30 am

> hoped to get about 4 megawatts of solar energy from local
> rooftops through this program, enough to power roughly 1,250 homes

This would only be true if each of these 1,250 homes used only an average of 320KW/home--which is very hard to do. If the per-home power use were to be closer to 600KHW/month, then the number of homes powered would drop by half, to something over 600.

The City should provide the residents, and captive customers of the PAU, monthly use reports that provide meaningful information about the use of power in Palo Alto--like a histogram showing consumption by KWH. It is very hard to believe anything the PAU says, most of the time. Same for the City Council.



Posted by Green Energy Professional, a resident of Green Acres
on Aug 20, 2012 at 8:17 am

In the United States, we do not allow monopolies such as utility providers to operate unchecked.

PG&E, for example, is checked by the California Public Utilities Commission (CPUC): an independent third party that represents state and ratepayer interests in rate-cases and other regulatory proceedings.

In Palo Alto, that role is supposed to be filled by the city council, our elected representatives. However, the system is structurally flawed, as the city charges a Utility Users Tax that is based on total utility revenue collected. The council is therefore incentivized to allow rates to rise, so that the general fund receives more revenue and councilmembers can take care of their union benefactors' out of control pensions or sponsor pet projects.

The voters should look at their running 20% utility rate increases (at a time when wholesale energy is cheaper than its ever been) and demand that this anti-capatalistic, un-American, and probably illegal conflict of interest be addressed immediately by repeal the UUT.


Posted by BP Observer, a resident of Barron Park
on Aug 20, 2012 at 9:42 am

While we're on the topic of CPA Utilities did anyone see this little gem from last week's edition of the PA Weekly?
News - Friday, August 17, 2012


"WATER SURVEY ... Residents received notices by mail last week regarding a state-mandated residential water survey to protect drinking water. The survey asks questions regarding a backflow-prevention device. To protect drinking-water quality, Palo Alto is required by state law to administer a backflow-prevention program. Residents can complete the survey online or return the form by Aug. 24. City Utilities department staff will come to properties to do an inspection if the resident does not complete the survey. The property owner will then be billed up to $250 for the cost of the inspection. Questions can be addressed by emailing the city at backflow@cityofpaloalto.org or by calling 650-496-5926. The online survey is available at www.cityofpaloalto.org/backflow."

I did not receive my letter so I can't complete the survey. Guess I and others like me will be receiving bills for $250...




Posted by the_punnisher, a resident of Mountain View
on Aug 20, 2012 at 10:43 am

the_punnisher is a registered user.

The real issue is the ROI on this kind of " investment...

PV panels are still only %20 efficient. " Teakettles " ( generating plants that use a heat source to boil water and spin turbines ) are at least 40% efficient. The best CLEAN energy is from hydroelectric or thermal vents ( global warming anyone :/ ).

The other requirement is many SUNS ( Google this measurement ) for the proper working of solar ( PV ) panels to put energy back on the " grid ".

The time for PV panels is not here. When the PV panels become 40% efficient, THEN it is time to supplement & employ PV solar power.

I'm afraid that the citizens and local government were misled by some people that should lose their cushy job.

BTW, it was a course at Foothill College that clued me into the way to get the REAL numbers, not today's hype.


Posted by Crescent Park Dad, a resident of Crescent Park
on Aug 20, 2012 at 12:15 pm

@ Petroleum: Not that I'm a big defender of local governments...but in this case I think you're not reading your own mail or utilities bill.

Each month we receive a utility bill that shows 12-months usage (via individual bar charts) for water, electricity and gas. Very easy to read and to make comparisons versus current usage. Further, the CPAU has made many communications that it is easy to look up and publish your own energy reports via their website.


Posted by Jo Ann, a resident of Embarcadero Oaks/Leland
on Aug 20, 2012 at 12:38 pm

Palo Alto Utilities really needs to be reined in. Send back your survey saying NO, you won't spend an extra dime with them for what they're calling green energy. Remind them they're providing a service that should be cost-effective.


Posted by dave , a resident of Downtown North
on Aug 20, 2012 at 1:29 pm

Nor did we get a backflow water survey request in the mail. I wonder how many didn't get one? Was it possible that they were "forgotten" to allow the city to later bill the $250? Perish the thought - or not.

BP Observer. Thanks for the web site to complete the on-line survey.


Posted by Petroleum-Powers-The-World, a resident of Another Palo Alto neighborhood
on Aug 20, 2012 at 2:03 pm

> In Palo Alto, that role is supposed to be filled by the city council, our elected representatives.

This is correct, at least as far as the CA PUC claims. The Palo Alto City Charter does not make that claim. The City Charter does, however, make it a misdemeanor for a Council Member(s) to interfere in the direct operation of the government, however. The Utility is a wholly-owned operation of City Government. This makes the kind of "oversight" that the PUC is supposed to provide the commercial utility providers virtually non-existent where the Palo Alto City Council is concerned.

> However, the system is structurally flawed,

Yes, it's flawed primarily because there are no definitions, nor checks-and-balances, included in the City Charter to provide clear boundaries for/expectations of, the Council, relative to Utility oversight. Given how complicated oversight of a Utility is, the idea that elected officials (without even the requirement of a high school education) could actual provide any oversight is laughable. The laws exempting municipal utilities from CA PUC controls should be repealed/modified to allow to require the CA PUC monitor municipals too. Selling the Utility to a commercial operator would be an even better idea, where public safety derived from oversight is concerned.

> as the city charges a Utility Users Tax that is
> based on total utility revenue collected.

The public could vote the Utility Users' Tax out of existence. It's just a matter of getting 1,500-3,000 signatures (more-or-less) on a petition, and then people voting in sufficient numbers to kill off this $11+M "tax" on their utility consumption.

As to the "backflow" on-line survey --

Web Link

From reading this web-page, it's not clear everyone will be getting a survey notification at the same time.


Posted by John Galt, a resident of Fairmeadow
on Aug 20, 2012 at 2:33 pm

Green translates to "COSTS MORE" whether it is a Prius or solar panels. Does give 'em the "I'm rich and green and your not, peasant"
catchet.


Posted by Cur Mudgeon, a resident of Greenmeadow
on Aug 20, 2012 at 5:11 pm

Where do I sign the petition to roll back the utility tax? I'm sick of getting the pious little holier-than-thou mailings that show me I'm less green and energy efficient than my neighbors! Waste of my utility payment dollars!


Posted by Steve, a resident of Adobe-Meadows
on Aug 20, 2012 at 5:53 pm

I pay about 11.6 cents/kW-h for Palo Alto Green.
About 3.8 cents (33%) of that goes to "Distribution, 1.5 cents (13%) to PA Green, 5.6 cents (48%) to
"Commodity", and .3 cents (3%) to public benefit.
I am not sure which of these amounts to compare to what the city
proposed to buy the energy (between 12 and 14 cents/kW-h), but I guess that "Distribution" includes maintanence and admin and at least
part of it would have to be added to the buying cost.
So PA Utilities would be buying energy at higher price than it is selling it and our utility bills would go up in the short term.
However, with 10 and 20 year contracts for the rooftop solar, and the difficulty of predicting what the more coventional costs will be, it is possible that 5 or 10 years from now it will be seen as
a bargin.
The main issues to me are:
1) How much per kW-h is the additional cost now and projected into the future compared to current costs.
2) Is that additional cost worth the benefit of relatively polution
free energy?

The first question is easy to answer so somebody please do it.
The second one is open to many opinions, but depends on the first.


Posted by Petroleum-Powers-The-World, a resident of Another Palo Alto neighborhood
on Aug 20, 2012 at 7:53 pm

> However, with 10 and 20 year contracts for the rooftop solar,

Ah .. and who is going to sign these contracts .. promising to be in business in 20 years? Or even living in the same house, or living in Palo Alto 20 years from now?

How many businesses sign 20-year contracts for anything? That time frame is simply too far out.


Posted by Yes, Let's get rid of UUT, a resident of Barron Park
on Aug 21, 2012 at 11:09 am


Agree with Bob and Green Energy Professional. Let's try to get rid of UUT and ever escalating rates. I see people using very little energy and water and paying more and more because of all the fixed/ever increasing personnel costs. And I think those neighbor comparison letters are an incredible waste..they make little sense since there are vastly different numbers of people living in homes.


Posted by oy!, a resident of St. Claire Gardens
on Aug 21, 2012 at 3:02 pm

....thought Palo Alto residents were all in favor of outsourcing city jobs? Now that the the Palo Alto Utilities Dept. is largely outsourced to private contractors and run by unqualified managers transferred over from Public Works after the last utilities dept. scandel a couple of years ago, all of a sudden residents are complaining about the outsourced help. Guess residents (53% who are renters according to the 2010 census) just like complaining about everything and anything. What a pity!


Posted by solar, a resident of another community
on Aug 21, 2012 at 5:04 pm

PGE rates for electricity per kwh:
Tier 1: $0.1228
Tier 2: $0.146
Tier 3: $0.299
Tier 4: $0.339
Tier 5: $0.339


Posted by Petroleum-Powers-The-World, a resident of Another Palo Alto neighborhood
on Aug 22, 2012 at 9:18 am

> Now that the the Palo Alto Utilities Dept. is largely
> outsourced to private contractors

Can't see any complaints about outsourcing in the reader postings on this topic. While some work has been outsourced to private sector parties, most of the head count is still City employees.

> and run by unqualified managers transferred over from
> Public Works after the last utilities dept. scandel a couple
> of years ago

And even if this were true, what evidence can you provide linking the "unqualified managers" to the topic of low public interest in local solar power generation, or to growing costs of running the Utility?


Posted by Orchid-fan, a resident of Barron Park
on Aug 22, 2012 at 10:20 am

@BP Observer and other posters

Just checked the link given in BP Observer's post to City website regarding the water survey. It says there that the notice that was run in the PAWeekly was run with no consultation with the City. The survey currently being conducted is only a pilot-testing survey with a few Barron Park residents (I am not one who received a notice to participate). You would need a personal ID# to access the online survey, and you would receive that ID# in the City's letter when they mail the survey notice to you. Such a mailing will be done City-wide in months to come. So residents have not been excluded from the mailed or online survey; this time around it is merely a small pilot test involving a small sample or residents in Barron Park.

And in case anyone is wondering, I am not a fan of most of what the City does, but information in some of these posts is just plain wrong. Go to the link and see for yourself: www.cityofpaloalto.org/backflow


Posted by BP Observer, a resident of Barron Park
on Aug 22, 2012 at 1:50 pm

Orchid-fan,
I agree that the information on the city's web page is informative - now. This page has been extensively revised since Monday in response to the overload of emails that have been received by "backflow". If this info has been provided in the first place, much confusion could have been avoided.

Additionally, PaloAltoOnline revised their article under the same Aug 17 date without any acknowledgement that it was a correction/clarification or that any sort of change had been made.
Oh well - didn't cost me $250 anyway.


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