Thursday, March 13, 2014

Solar Program Remains a Challenge in Palo Alto

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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