It took four years of patience and frustration, but the clouds have finally parted for Palo Alto CLEAN, the city's pioneering program for buying solar energy produced by local customers.
Last December, the city received its first offer of solar energy -- from the Unitarian Universalist Church of Palo Alto, which would build a canopy of solar panels over its parking lot. Then in February, a company called Komuna Energy submitted four applications to install solar panels at various city garages, where the company is leasing space under a 25-year agreement.
For local clean-energy advocates, the five applications are a sign that the city's experiment with a "feed-in tariff" program, as programs of this sort are called, is finally working. But that joy may be short-lived.
The applications have come at a time when the Utility Department is considering drastically slashing the amount of money it would pay for the locally produced energy, from 16.5 cents per kilowatt hour to something much lower.
At least, that is the proposal the City Council's Finance Committee unanimously adopted last month and that the council was prepared to approve without debate on its "consent calendar" this week. Instead, after hearing protests from a few clean-energy advocates, the council agreed to delay the vote and to further discuss the future of Palo Alto CLEAN at its meeting on Monday, March 28.
The program (whose acronym stands for "Clean Local Energy Available Now") made its debut in March 2012 with the goal of enhancing the reliability of the city's energy supply and increasing Palo Alto's renewable-energy portfolio. After failing to attract any applications in the program's first few years, the council agreed to raise the price it would pay for energy from 14 cents per kilowatt-hour (for a 20-year term) to 16.5 cents per kilowatt hour.
Now, however, the market rate for solar energy is dropping dramatically. On Monday night, the City Council unanimously approved a solar contract with Hecate Energy Palo Alto LLC that would have the city paying 3.67 cents per kilowatt hour -- a rate that is more than 50 percent lower than those of all the city's existing solar contracts. In February, Utilities Department contract administrator Jim Stack called the Hecate rate "exceptionally low" -- the lowest ever for a solar purchaser in the state and possibly in the nation.
Given the falling price of solar power, members of the council's Finance Committee agreed to modify Palo Alto CLEAN so that the city would no longer offer the 16.5-cent rate on future contracts (the rate would remain in place for existing agreements). Committee Chair Eric Filseth, who proposed the change, noted that the Utility Department's cash reserves are essentially depleted, and in fact the department in July will be increasing electricity rates charged to its customer.
"The amount of energy we're talking about (from Palo Alto CLEAN) is a tiny fraction of what's used in the city," Filseth said. "It's just hard to see, in a year in which we think is a lean year for the city, that the city should be paying 16.5 cents per kilowatt hour when we can be buying it elsewhere for 3.6 cents per kilowatt hour."
His three committee colleagues -- Karen Holman, Greg Schmid and Cory Wolbach -- voted to go along with the change. Schmid said at the Feb. 16 meeting that it's "very hard to justify" a program in which city pays so much for energy that it could get at a much cheaper rate from other sources. Under the committee's recommendation, the city would pay the market rate in the future for solar energy from local producers.
This isn't the first time the council has considered a Finance Committee recommendation to drop the price for Palo Alto CLEAN energy. When the recommendation came up last year, the council voted it down.
Proponents of Palo Alto CLEAN hope the same thing will happen this time around. At last Monday's meeting, Craig Lewis, executive director of nonprofit group Clean Coalition, a local nonprofit that's worked with the city to set up the program, argued that locally generated energy can't be compared to solar power purchased on the open market.
"Local solar provides community with resilience," Lewis said. "That's something that remote generation can never provide to Palo Alto and any other community."
The city's Utilities Advisory Commission, which also discussed Palo Alto CLEAN last December, unanimously recommended that the 16.5 cent rate be kept. Commissioners emphasized the value of local solar energy, even if it costs above the market value.
Bruce Hodge, founder of the group Carbon-free Palo Alto, on Monday blasted the Finance Committee for what he called its "knee-jerk" reaction and claimed that the action would essentially kill Palo Alto CLEAN.
Resident Vanessa Warheit noted that Palo Alto CLEAN is a pilot program and urged the council not to halt the experiment prematurely.
"If we kill it before it has a chance to do what it's designed to do, we won't actually learn much from it," she said.