Reversing course, Palo Alto renews solar-energy program

City Council drops plan to reduce rate paid for Palo Alto CLEAN energy

Just when it looked like the sun would go down on Palo Alto CLEAN, the City Council offered the program a boost of energy when it voted not to proceed with a proposed rate change that critics say would have doomed it.

The program, which allows customers to sell solar energy to the city, was slated to undergo a dramatic change after the council's Finance Committee unanimously recommended last month to slash the price that the Utilities Department would pay for the locally generated energy.

At the Feb. 16 meeting, the committee unanimously voted to reduce the rate from the existing level of 16.5 cents per kilowatt hour to the "avoided cost" price of 8.9 cents per kilowatt hour for a 20-year contract.

The change was set to be approved by the full council last week but was put on hold after protests from local clean-energy advocates. The council agreed at that time to delay its decision and to hold a public hearing on the proposed change. On Monday night, it handed Palo Alto CLEAN's champions another victory by scrapping the Finance Committee's recommendation and continuing the program's current pricing.

The Finance Committee recommendation came at a time when Palo Alto CLEAN is finally showing signs of life after three years without any applications. The Unitarian Universalist Church of Palo Alto submitted the first application in December 2015 – a solar canopy that will be installed over the church's parking lot. And in February, the city received four other applications from Komuna Energy for projects involving solar panels on rooftop of city-owned parking garages.

Finance Committee members reasoned that wholesale prices for solar energy have been dropping dramatically (last week, the council approved a solar contract with a California record-setting rate of 3.6 cents per kilowatt hour) and that the city's operational reserves have dwindled.

Councilman Eric Filseth, who chairs the Finance Committee, reiterated these arguments Monday. The practical benefits are "tenuous," he said, and while the costs aren't that high at the current level (if the program reaches its cap of 3 megawatts, the city's subsidy would be about $380,000 annually; the five existing applications add up to about 1.3 megawatts), they "could increase significantly if it expands beyond the pilot."

But he ended up being the sole dissenter in the 6-1 vote (with Greg Scharff and Karen Holman absent) -- a decision that followed a procession of speakers preaching the program's merits and blasting the Finance Committee's recommendation. Craig Lewis, founder of the renewable-energy nonprofit Clean Coalition, said that the program gives the city its best chance for reaching its adopted goal of getting 4 percent of its solar energy from local sources.

"The only way Palo Alto will fulfill the 4 percent local solar goal is to open it up to the commercial market segment," Lewis said. "It's the only segment where we can get the rooftops and parking lots we need to fill the volume of local solar that we need. Palo Alto CLEAN is by far the most cost-effective approach."

Councilman Greg Schmid, who sits on the Finance Committee and who recommended the rate change, was skeptical about claims of the program's "cost effectiveness." He cited the low rate in council's new solar contract with Hecate Energy and asked whether it's time to consider other ways to spend the money that the city would save with the low rate. But when it came to the vote, he joined the majority in scrapping the committee's recommendation.

Councilman Cory Wolbach also reversed his stance, but with far less ambivalence. He offered a simple explanation for the February vote.

"I think we made a mistake," Wolbach said.

The council generally agreed with speakers who maintained that the proposed change would effectively kill Palo Alto CLEAN. Bruce Hodge, founder of Carbon-free Palo Alto, urged the council to "avoid essentially killing a pilot program that is only just beginning to bear fruit."

Michael Closson, former executive director of Acterra, agreed and also spoke out against the proposed change.

"It's very important at this point in time to keep the tariff the way it is and allow Palo Alto to reach its target," Closson said.

Like some of the speakers, Mayor Pat Burt argued that it's not appropriate to compare the wholesale solar rate to the rate in Palo Alto CLEAN, which carries the benefits of localization. The public subsidy for the program would not be an anomaly, he noted, given that the city already provides subsidies for things like electric-vehicle chargers and its Zero Waste recycling program.

Burt urged the committee to think "more broadly and deeply" about issues like this one and chided its members for approving a rate change that was "really meant to end the program."

"Using this as a backdoor way to kill that program and, indirectly, kill the local renewable program is really, I think, not proper," Burt said.

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19 people like this
Posted by common sense
a resident of Midtown
on Mar 29, 2016 at 7:40 am

Spending 16.5 cents/kw for what the utility department can buy for 3.5 cents/kw, costing $350,000 per year, and likely to go up.

And our utility rates are going up in July.

Special interest groups at work, in robbing the residents to pay for their pet projects.

12 people like this
Posted by mutti
a resident of Adobe-Meadow
on Mar 29, 2016 at 10:27 am

Huge subsidy for solar. Not sure I want to do this, but I guess I have no choice.... The vocal minority wins again.

11 people like this
Posted by Garden Gnome
a resident of Crescent Park
on Mar 29, 2016 at 11:07 am

I was not surprised that councilman Eric Filseth injected some sanity into the proceedings.

It is unfortunate that the other six members voted so poorly.

7 people like this
Posted by Curmudgeon
a resident of Downtown North
on Mar 29, 2016 at 12:49 pm

'"Using this as a backdoor way to kill that program and, indirectly, kill the local renewable program is really, I think, not proper," Burt said."

Easy there, Burt. It is the FINANCE committee. It did its job.

12 people like this
Posted by GoSolar
a resident of Midtown
on Mar 29, 2016 at 12:50 pm

A year or two ago the Council required that all new (home) construction include an electrical circuit (240?) for an elelctric vehicle charging station. Although we have an electric vehicle and charging station, I thought the Council overstepped its bounds by forcing that on new builders. And this requirement focused on consumption, not production.

But since they did that, I suggest that they *require* that all new construction (retail and homes) include solar panels. I contend that the value of solar generated electricity far outweighs the incremental cost of such a requirement. Lets focus on the generation, not consumption. Lets expand the market for the solar panels and help lower the cost. Let's be proactive in achieving our goals of 4+% solar energy.

And in the spirit of full disclosure, I have solar panels on my roof.

13 people like this
Posted by Not environmentally p c
a resident of Midtown
on Mar 29, 2016 at 1:01 pm

Isn't this supposed to be the finance committee? Eric. You're the only person who really represents the majority of Palo Altans. I donot want to be paying for people's pet projects. Palo Alto needs to get back to the basics

2 people like this
Posted by Judith Wasserman
a resident of Leland Manor/Garland Drive
on Mar 29, 2016 at 2:17 pm

Judith Wasserman is a registered user.

@GoSolar: There will be no need for the city to require solar panels on all new houses because the state will require it in 2020. Non-residential is coming along in 2025.

13 people like this
Posted by Pricey
a resident of Another Palo Alto neighborhood
on Mar 29, 2016 at 3:00 pm

Solar panels and installation are very expensive, requiring 20 or more years to pay for themselves. The panels from China are less costly, but installation is no cheaper, and many of the panels from China have damaged people's roofs ( incl. our own new roof).

Many roofs need a special extra layer between the panels and the roofing material to prevent damage--more $$$!

The panels using heated water WILL destroy your roof AND your ceiling-- not IF but WHEN.

If the state will require solar panels on new homes by 2020, the solar industry had better get its act together fast!

These panels are going to jack up the cost of housing even more!

9 people like this
Posted by jerry99
a resident of Barron Park
on Mar 30, 2016 at 8:26 am

Outrageous,stealing money from PA residents to pay for the idiotic solar program. Our electricity rates are going up in July, even though the cost of natural gas that is used to generate the electricity is down 95% from its 5 year high.
Complete lunacy and again kissing the rear end of the fools from the green community.
Stop this subsidy of solar panels immediately.

2 people like this
Posted by Cedric de La Beaujardiere
a resident of Barron Park
on Mar 30, 2016 at 10:04 am

Cedric de La Beaujardiere is a registered user.

Mayor Burt and the Council have done well to preserve the CLEAN program. It is a small pilot program intended to incentivise businesses to work with the city to smooth out legal, contractual financial, permitting and institutional hurdles to larger scale local solar energy. The framework developed through this pilot program will make it easier and cheaper for future businesses partners to install similar systems.

@Pricey, I think you are conflating solar water heating panels with solar electricity generating panels. I have never heard of a special layer being needed between a roof and solar electric panels. If your rooftop solar water heating system leaks you could damage your roof, particularly if it was poorly installed, but this is not a certainty since roofs by are built to withstand water.

@Jerry99, natural gas prices may have come down, but most of Palo Alto energy is not from NG. I don't have access to the figures at the moment, but considering that PA electricity portfolio is already carbon neutral, NG must constitute only a small portion of our electricity generation. A lot comes from hydro electric dams, and PA Online had a recent article on the drought's impacts on electric rates.

Like this comment
Posted by Cedric de La Beaujardiere
a resident of Barron Park
on Mar 30, 2016 at 11:25 am

Cedric de La Beaujardiere is a registered user.

Also, @Pricey's payback period for solar power is way off. A brief Web search for instance finds this 2014 article quote: "A state like California, for example, offers average payback periods of about 9 years. It takes as little as 7 years to recoup all upfront costs in New Jersey. Again, your payback period may be higher or lower depending on the specific circumstances surrounding your solar installation." (Web Link)

1 person likes this
Posted by Roger Overnaut
a resident of Evergreen Park
on Mar 30, 2016 at 5:19 pm

As @Cedric's Web Link clearly emphasizes, the solar payback period depends strongly on how much subsidy the government and utilities pony up. As this thread--and recent events in Nevada Web Link --prove, those subsidies are highly vulnerable to changing political whims, and so therefore is the payback period.

You pays your money, you gets your sunjuice, and you takes your chances.

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