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Distributed Generation: Last Big Battle for State Regulators?

Fortnightly Magazine - October 15 1999

the so-called stranded assets will be and so it is very difficult to compute the level of the charge with real certainty."

The Next Generation:

A Closed Club for Gas Turbines?

Eileen Smith, founder and chief executive officer of Solar Development Cooperative, says the industry has not given photovoltaics and renewables a fair shake as alternatives to gas-fired microturbines as DG.

"Renewable energy resources are viable alternatives to gas turbines, meeting our sustainable energy goals with competitively affordable deployment," she says.

Smith adds, "CPUC's ORA's Opening Comments forecast the price of gas turbines (with gas fuel that is highly unpredictable) at a level of 100,000 units per year. Building integrated photovoltaics (BI-PV) and fuel cells have been adequately demonstrated in the past 20 years and have reduced in price enough to justify their mainstream deployment as a priority focus in [CPUC proceedings]."

Furthermore, Smith attacks ORA's Morse for what she sees as prejudicial statements against PV.

According to ORA comments, "Photovoltaic (PV) sales are growing at a rate of 30 percent per year, but PV systems cost 10 times as much as gas turbines to purchase and install, and three times as much to own and operate."

ORA does not mention any consideration of externality costs and fossil fuel deployment, Smith responds. The primary cost of gas turbines, she argues, is the gas fuel one must purchase to use the turbine.

Smith breaks down the costs of PV.

"[For example], consider a 7-kW peak project in Southern California. This project will produce an average of 42 kWh per day. That is 12,600 kWh a year, or around 34 kWh 365 days a year." The going ratepayer price for electricity is 12 cents per kilowatt-hour, which averages to around $1,500 a year, she says. By contrast, BI-PV averages $1,250 to $1,400 per year when all costs are accounted for, Smith says.

"It does not at any time cost 10 times the amount of turbines. The BI-PV has predicted a 30- to 50-year life with minor maintenance and repairs. With this figured in, that means a ratepayer is only paying an average of $600 per year ¼ with a savings of nearly $1,000 a year," she says.

Furthermore, Smith believes the adoption of a 50-year warranty for solar electric rooftops, now warranted for five years, and the ability to wrap BI-PV costs into a 30-year mortgage would greatly increase sales and production levels.

Industry analysts estimate that solar power is an approximately $2.0 billion business, growing in excess of 20 percent per year. While an estimated 76 percent of solar cell capacity installed in 1997 was in remote applications, unconnected to the power grid, it is expected that grid-connected applications will grow rapidly. Increasingly, solar power is finding on-grid applications for peaking power and to meet customer preferences for "green power," according to Hugh Holman, senior equity analyst at BancBoston's investment bank, Robertson Stephens.

"We believe the restructuring of the electric utility industry in the U.S. and Europe will prove to be a powerful catalyst in creating new opportunities for grid-connected solar power," he