Solar program remains a challenge in Palo Alto

PaloAltoCLEAN renewed, despite lack of participants

When Palo Alto launched in spring 2012 a program that allows local businesses to sell solar energy to the city, officials lauded it as the latest example of the city's commitment to green energy and, in the words of Councilman Pat Burt, an "excellent example" for other utilities to follow.

But more than 18 months later, the program known as PaloAltoCLEAN (Clean Local Energy Available Now) still has no participants, prompting utilities officials and council members to consider revisions. Earlier this month, the City Council Finance Committee heard the latest presentation about the new program and recommended keeping it in place with few changes.

"We still don't have any takers in the program," Assistant Jane Ratchye told the committee on Dec. 17. "We think we're close to having some takers for this program."

Approved by a unanimous vote in March 2012, the program enables commercial customers to build solar systems on their properties and sell power to the City of Palo Alto Utilities under a long-term, fixed-rate contract. The current rate for this energy is 16.5 cents per kilowatt hour for a 20-year contract (the council raised it from 14 cents after getting no participants in its initial bid). Because this rate would entail a subsidy from ratepayers, the council agreed last December to cap participation to 2 megawatts.

Even so, commercial customers have been reluctant to build solar panels and sell energy to the city. A staff report from the Utilities Department notes, however, that "there continues to be interest by developers in the CLEAN program" and argues that the 16.5 cent/kWh price is "sufficient to attract projects and that further education of property owners about the program will yield program participation."

"Despite the lack of participation, there have been positive outcomes from the program offering," the report states. "The program prompted developers to take a serious look at the cost of developing solar projects in Palo Alto, and some of them shared that information with CPAU staff."

Utilities Director Valerie Fong stressed the value of all parties in the discussion picking up experience in what is known as a "feed-in tariff" program.

"Staff would like to gain experience working with this tariff and working with developers," Fong said. "I think the market place needs this experience as well so that they can understand how to do projects under these sorts of opportunities."

The committee voted unanimously to keep the program going under the rate of 16.5 cents per kilowatt hour, though members agreed with Burt's suggestion to raise the cap from 2 megawatts to 3 megawatts. Burt, who chairs the committee, noted that the city has received some proposals for solar projects on city-owned properties, including at the Palo Alto Airport and at a city-owned garages. Though neither plan has materialized to date, the possibilities are still there, Burt said.

"We do have the possibility that we can go from of waiting, waiting to where a couple of these pop and we have to say no to one of them because we didn't have the allotted capacity in the program that would allow (them)," Burt said.


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Posted by Lost-In-LA-LA-Land
a resident of Another Palo Alto neighborhood
on Dec 31, 2013 at 12:06 pm

What’s needed for a program like this to be successful is a compelling business reason for a company to want to deal with the City, becoming, in essence, a partner in a quasi-socialistic venture.

The article doesn’t provide any of the money-related information that a prudent business man would naturally want to know—such as: what’s it going to cost me, and what kind of money can I make using my property, and my equipment, to help the City push this social-engineering agenda?

Capped at the 2MW (instantaneous generation) maximum, at a $.165/KWH rate of payment--it would seem that a business could make about $8,000/day generating power for sale to the utility. One on-line solar panel cost calculator suggested that the installation costs for such a system would be about $60,000. Presumably the City will subsidize some of these costs.

On face value, this might seem like an opportunity worth pursuing. But the reality is that the output of a solar panel is currently only about 12 watts per square foot, so that the surface area needed to generate 2MW is about 166,000 square feet—in/around four acres. (Land in Palo Alto is valued at/about $5-$6M per acre.)

There just aren’t that many 170K sq. ft. empty spaces in Palo Alto—at least not at the moment. Almost all of the large open spaces are owned by the public sector. The roof of the Stanford shopping center is about the only large area that might be available—but given the hostility towards the shopping center that was exhibited by the City Council, and Staff, over the past few years, it’s a bit of a stretch to believe that they would be interested in such a program--and reality bears out that supposition.

Roche, at one point, was supposed to have initiated some sort of on-site solar electrical generation program—but they have moved on. And then there is the issue of the 20-year contract that the Utility wants its “partners” to sign. While some businesses have been in town that long—it would be hard to believe that all of the businesses here now will be here in twenty years. Even the “venerable” HP has been appearing on various lists of companies that are headed towards extinction.

By-and-large, it’s no surprise that this program is a bust. Moreover, given that the City’s electrical purchases have been as a GWH in the past, and will, with projected growth, continue to increase—just how valuable can a few .5MW to 2MW (daylight) contributions be to Palo Alto’s need for power?

Mr. Burt seems to be a great cheerleader for big government—but his acumen when it comes to running a utility continues to disappoint.

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Posted by Left of Boom
a resident of Another Palo Alto neighborhood
on Dec 31, 2013 at 1:11 pm

Left of Boom is a registered user.

A fixed rate of 16.5 cents over 20 years is not a realistic rate without an inflation clause to reflect market conditions.

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Posted by Do the math
a resident of Esther Clark Park
on Dec 31, 2013 at 7:38 pm

It takes 25 to 30 years for solar panels to pay for themselves. We did intense research, and in our case the roof would also need reinforcement. We probably will not live long enough for it to pay for itself. On top of that, our roofer ( Los Gatos Roofing), told us we would have to place a special layer underneath the panels to prevent roof damage. So we decided against it.

Now, we have read in the Chronicle a few months ago that PG and E ( aka PIGGY) is trying to get out of being force to buy back excess power produced by solar panels. The Wall St. Journal apparently thinks they will win and thus set a precedent.

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Posted by CrescentParkAnon.
a resident of Crescent Park
on Dec 31, 2013 at 9:16 pm

If PG&E or the City of Palo Alto can get out of having to buy energy back from the solar customers, then there should not be a fee for connecting to the grid, or a charge if you want to disconnect from it too.

I'd love to go solar, but there is a giant Sequoia tree just to the south of my house that practically covers my whole house in a giant shadow for most of the day and most of the year. I should be able to demand that tree be removed or topped off or something.

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Posted by Don
a resident of Charleston Gardens
on Dec 31, 2013 at 11:01 pm

Seems the comment-ers know a lot more than the author of the story. This is an interesting topic. I wonder why it is to the taxpayers advantage to pay energy profiteers to produce a product we can buy cheaper.

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Posted by SteveU
a resident of Barron Park
on Jan 1, 2014 at 8:54 am

SteveU is a registered user.

Why is it that I don't believe the $60K the calculator used by Lost-In-LA-LA-Land is the only (lifetime) cost?
How are these arrays Taxed by the county assessor?

With a 25-30 year break even point:
Additional costs during Re-roofing?
Repair/replacement costs for FAILED modules?
Additional insurance coverage costs for Storm and other DAMAGE to the system?

Don't get me wrong. Alternative energy is a good thing.
But Please BAN using 'funny money' savings advertising hype.

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Posted by CrescentParkAnon.
a resident of Crescent Park
on Jan 1, 2014 at 10:21 am

> It takes 25 to 30 years for solar panels to pay for themselves.

By the dollars and pennies that is true, but is the price we pay for energy really accurate. Are we really factoring in all the expenses of the energy we pay for, the environmental costs, the costs of military in terms of money and effect on our society, the cost of health care which even with ObamaCare we do noir really have, the cost of continually having to delude and disinform our public. I'm just guessing if all the costs were clear and added up many if not most of us would be really happy to spend the money to detach from the energy system and be self-sufficient, even if we had to pay maintenance and repair costs.

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Posted by Going Solar
a resident of Another Palo Alto neighborhood
on Jan 1, 2014 at 12:14 pm

Solar power systems are cost effective with the current 30% federal Income Tax Credit. Ground mount systems are lowest cost with higher costs for roof or canopy mounted systems. CA state law exempts solar systems from increasing the site's property tax.

The City of Palo Alto just signed 3 power purchase agreements for a fixed cost of 7 cents per kilowatt-hour generated for 20 years from new PV systems to be built in the Central Valley.(Web Link)

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Posted by Lost-In-LA-LA-Land
a resident of Another Palo Alto neighborhood
on Jan 1, 2014 at 1:30 pm

> Why is it that I don't believe the $60K the calculator used by
> Lost-In-LA-LA-Land is the only (lifetime) cost?

You're absolutely right. There were other costs that could have been included in the posting, but it was getting long enough.

Everything has a fixed lifetime. Electronics needs to be replaced every seven to ten years, and panels tend to wear out--frequently sooner than the manufacturer claims--so it's not unexpected to see sub-systems needing replacement.

There is also the alternate use of money, or space, in this case. Perhaps there might be some idle roof space here and there in town, but if anyone decides to use ground-level space for the solar panels, then one would need to look at the alternate use of that space for revenue generation. Property in this town can generate a lot more revenue that that proposed by the PAU.

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Posted by solar
a resident of another community
on Jan 1, 2014 at 2:10 pm

“It takes 25 to 30 years for solar panels to pay for themselves.”

Maybe it would take that long in Palo Alto, but with PGE our solar panels from Solar City will pay for themselves in 7 years.

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Posted by Read the Report
a resident of Another Palo Alto neighborhood
on Jan 1, 2014 at 6:56 pm

It would be better if you read the staff report or watched the actual Finance Com meeting.
The spaces that the Utilities staff or the Com said are being considered by developers are city parking garages and the airport. The land would not be an expense and the shade under the panels would have revenue value. The other areas used by programs like this are most often rooftops.
Also, II thin that the Roche project was built and is now a VM site. There are lots of other large commercial PV projects in PA built under the other solar program, PV Partners which is a net metering program.

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Posted by Lost-In-LA-LA-Land
a resident of Another Palo Alto neighborhood
on Jan 1, 2014 at 7:57 pm

> city parking garages and the airport.

Then this makes no sense at all. The City parking garages belong to the City, and the Airport is on City-owned land that will, allegedly, be under the operational control of the City eventually. The article clearly reports on "local business"--which has nothing to do with the City-owned property.

If the City wants to use its land to generate power, then why have this elaborate scheme? Just pick a spot, and erect the panels, and get on with it.

If one needs to "read the report" .. then what good is reading this article?

Also looked up one of the companies that the City has signed with for PV-generated power: "Elevation Solar C LLC". As a company, it has virtually no web presence. Its parent company, Silverado Power LLC, on the other hand, does have a nice web-site, and seems to be legitimate. Leaving us with the question--why the need for a front company?

Since the power generation facility the City expects to purchase power from is not on-line at the moment, presumably Silvarado is looking for some way to avoid financial liability if the power source is not ready, or does not fulfill its contractual obligations, when this contract expects power to be available.

Wonder just how much due diligence the PAU has done here?

The contract that the City is trying to foist on local businesses can be found at:
Web Link

The contract is pretty convoluted, requiring, among other things, that the party interested in selling power to the City to buy into the United Nations IPCC findings--which seem to change from time to time. It's really hard to believe that any small business operator has the time to read, digest, and swear allegiance to the UN IPCC. Yet, that doesn't seem to be obvious to the environment zealots behind this program.

After a quick look-see at this contract, it's clear why no businesses have decided to get involved with this program. This program really should be shut down, because it's clear that it's burning up a lot of cash just setting it up. The attorney's fees for the contracts must have been in excess of $100K, or close to it.

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Posted by Trickle Down
a resident of Old Palo Alto
on Jan 2, 2014 at 2:01 pm

Maybe one of the reasons that no business' are buying into this nonsense is Utilities Director Valerie Fong's and Assistant Jane Ratchye comments that they "may" have a few "takers" into this dysfunctional city sponsored program. Local business owners would be wise to stay clear of anything Councilmember Pat Burt is promoting.

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Posted by carla carvalho
a resident of Duveneck/St. Francis
on Jan 2, 2014 at 10:18 pm

What is not mentioned is the EXTRA charge that many solar companies (ie Real Goods Solar) are now charging do "deal with the City of Palo Alto". In the case of my residential project, that extra "fee" was $1500. And 6 months later, the City of Palo Alto still hasn't reimbursed us for the rebate that we're due. For a City that calls itself a "green city", the hypocrisy is almost unreal

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Posted by Bru
a resident of Crescent Park
on Jan 6, 2014 at 12:57 am

Bru is a registered user.

> For a City that calls itself a "green city", the hypocrisy is almost unreal

Perhaps Palo Alto is more the "hypocrisy city", than the "green city".

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Posted by Got it right
a resident of Old Palo Alto
on Jan 6, 2014 at 9:17 am

Bru, you got it right! So did Carla-- when we remodeled our home recently, two contractors charged us extra to deal with Palo Alto: one for all the time and $ lost waiting at City Hall, the other for time and $ lost waiting for the inspector to show up!

Solar, I think you probably bought cheapie panels made in China. Good luck with those.

BTW, PGand E are the biggest hypocrites of all, trying to get out of buying back excess power from people with solar homes, and forcing inaccurate meters on people,

Sorry, but further commenting on this topic has been closed.

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