Solar Mandate? Like it or Not, Consumers Pay

Fortnightly Magazine - December 1998
EES North America

States earmark millions to fund solar projects via system benefits charges.

Making solar power a realistic choice for electric consumers is a burgeoning issue for state utility regulators. As part of electric restructuring, regulators are trying to finance the costs of solar installations.

Key to delivering commercial, on-grid solar power to new markets are state efforts, partnered with other government and industry actions. So far, the system benefits charge, or SBC, is the primary short-term incentive to develop solar, wind, biomass and other renewable resources. SBCs are being used in California, Rhode Island, New York, Illinois, Montana, Massachusetts, Connecticut, Pennsylvania and Wisconsin.

In early SBC actions, nearly $31 million for solar projects has been identified, usually leveraged with funding from customers, utilities or government. Conservatively, another $30 million in solar energy financing is on the horizon.

In most cases, the SBC is a small surcharge on electric distribution customer bills. SBC funds are used on buy down or rebate programs, projects set by competitive bids, or on other renewable enterprises. The renewable portfolio standard, or RPS, is a major incentive in restructuring laws. It's implemented over the long-term as markets develop for solar and other sustainable energy resources. %n1%n

The infusion of SBC dollars to finance solar energy technologies comes at the same time as a federal goal announced by President Clinton in June 1997 to place one million PV or solar thermal systems on American rooftops by 2010.

Both state and federal government efforts build on the alliances of electric utilities and others that began in 1992. Those efforts accelerated the commercial deployment of PV systems on and off electric grids. More than 7.5 megawatts of PV at 2,000-plus sites in 25 states will be installed by 47 electric utilities and power providers under TEAM-UP, a U.S. Department of Energy cost-sharing program with the Utility PhotoVoltaic Group. %n2%n These ventures are valued at $70 million and use $14 million of DOE dollars.

A review of early state efforts to finance solar energy via SBCs finds legislative and regulatory actions that:

• Recognize opportunities to leverage consumer benefits from an anticipated decade-long PV price decline;

• Couple PV grid-connected applications with other financing, such as the federal TEAM-UP, or cost reduction measures, such as net metering and tax incentives;

• Identify the state potential for renewable energy and the most economic PV applications in existing and new markets;

• Link PV resources with green pricing or green marketing efforts and customer information disclosure of green resources; and

• Provide incentives for near-term PV investments in anticipation of a growing market with a renewable portfolio standard.

SBCs, State By State

Two of the first state electric industry restructuring laws from 1996 are now financing PV systems. California and Rhode Island provide SBCs to undergird new investment in photovoltaics and renewable resources. SBC financing for substantially more solar energy is in the regulatory process of implementation in New York, Illinois, Montana, Massachusetts and Connecticut. Other financing efforts are underway at several utilities in Pennsylvania and Wisconsin.

California. The SBC fund of $540 million in the state's