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Battle brews over Palo Alto's solar-energy program

Clean-energy advocates fume over proposal to revamp Palo Alto CLEAN

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.

Comments

Like this comment
Posted by Linda Hansen
a resident of Green Acres
on Mar 25, 2016 at 10:10 am

I don't live there but I'm for the Clean Energy pilot that you are trying to close down. Don't do it! We need to start renewable energy now! Earth really can't wait any longer.


2 people like this
Posted by juan olive
a resident of Old Palo Alto
on Mar 25, 2016 at 11:20 am

As most people know. Everyone who breathes wants clean air to breath. Problem has been the amount of dollars charged to the average Joe. The ones at the top are the ones getting rich. It's as simple as that. (My opinion of course)


10 people like this
Posted by Joel
a resident of Barron Park
on Mar 25, 2016 at 11:45 am

It's a no brainer. 16.5vs.3.6. As a person on a fixed income in Palo Alto go for the reduced electric power price.


9 people like this
Posted by R Wray
a resident of Palo Verde
on Mar 25, 2016 at 2:33 pm

This program has been a boondoggle from the beginning. Nothing has changed.


4 people like this
Posted by Curmudgeon
a resident of Downtown North
on Mar 25, 2016 at 5:46 pm

"Local solar provides community with resilience," Lewis said. "That's something that remote generation can never provide to Palo Alto and any other community."

What level of resilience are we talking about here? This story is virtually totally clean of facts; does anyone know how our installed local solar output compares to our minimum daytime consumption need?

Like, somebody with $75k of annual living expense and $50k in the bank has resilience, but the same person with just $1k banked has essentially none.


Like this comment
Posted by Tom Kabat
a resident of another community
on Mar 26, 2016 at 9:38 am

I'm an advocate of clean energy and of reducing Greenhouse Gas emissions. (Full disclosure: I'm also a solar engineer, a utility energy consultant and former PA utility planner.) I understand Palo Alto's 100% carbon neutral electricity purchase policy has the utility buying competitive renewables (e.g. 3.65 cent solar) to meet not only current needs, but also meet any growth of electric usage and I applaud that! Palo Alto is now in a position to demonstrate real leadership by assisting the clean electrification of fossil fueled ground transport, water heating, and most space heating. Palo Alto has shown that solar can be affordably accomplished at utility scale and thereby allowing more electrification of former fossil loads. Electrification can only be accomplished locally, where the loads are. This local effort to increase efficiency and convert loads will provide cleaner local air, cost savings, climate leadership, jobs etc. The Palo Alto feed in tariff program has deviated from where it originally started as a value-based tariff where the utility offered local providers the full local value (including transmission loss savings and transmission cost savings (adding about 4 cents)) of the solar electricity. It seems reasonable that the Utility catch up with the falling market and resume offering full value-based contract pricing and let the chips (panels) fall where they may. The important thing for the climate is not where Palo Alto's panels will be located, but how can Palo Alto assist the transition of fossil loads to its already 100% carbon neutral electricity. This will result in more solar overall. Palo Alto can decide whether the much-higher-than-value offer of 16 cents per kWh should extend beyond any contracts signed thus far, but doing so may actually interfere with making climate progress.


2 people like this
Posted by An Engineer
a resident of Duveneck/St. Francis
on Mar 26, 2016 at 5:09 pm

"Palo Alto can decide whether the much-higher-than-value offer of 16 cents per kWh should extend beyond any contracts signed thus far, but doing so may actually interfere with making climate progress."

Perhaps you can help scope the issue. What fraction of the PA electric demand is supplied by local PV? How much is that added 4 cents costing the city annually? How many MWh is it buying? If this subsidy reduction inhibits additional PV installations, how does it affect our DER program?

Do you know how much government subsidy the 3.65 cent solar energy gets?

Considering the PV market meltdown that a recent subsidy withdrawal recently occasioned in Nevada, and given that PV energy is truly carbon-free, why do you claim that discontinuing our analogus local program may actually interfere with making climate progress?


Like this comment
Posted by Tom Kabat
a resident of another community
on Mar 27, 2016 at 9:19 am

I did not advocate discontinuing the Feed In Tariff program for local solar. I advocate returning it to the original value-based price offer for local generation. The value-based price is approximately the remote price paid for similar products( e.g. 3.65 cents), plus the local benefits (reduced transmission charges, reduced transmission and distribution losses together totaling for example another 4 cents/kWh). In this example the total local value of solar would be 7.65 cents/kWh. There is very little if any carbon reduction from localizing the placement of solar panels compared to putting them in sunnier remote areas. If localizing solar panels costs more than the additional localization value of roughly 4 cents per kWh, then localization is not a good deal for the community. In that case the panels should be placed remotely so more community money is preserved to do the vital carbon reduction activity of electrification of water heating and vehicles etc. This additional electrification of former fossil fired water heating etc, would lead to the procurement of even more renewable electricity while following the carbon neutral electric portfolio policy of Palo Alto. That is why I point out that overpaying to localize panels may actually interfere with making climate progress, i.e. localization could result in fewer solar panels.


1 person likes this
Posted by An Engineer
a resident of Duveneck/St. Francis
on Mar 27, 2016 at 6:10 pm

"If localizing solar panels costs more than the additional localization value of roughly 4 cents per kWh, then localization is not a good deal for the community."

The tradeoff is whether to incentivize increasing the supply of 100% pure, unadulterated locally grown solar energy, or to buy cheap sunjuice made in Palmdale which is diluted at least 300:1 by the grid content on its way here. Its resolution involves policy considerations in addition to simple pricing.


1 person likes this
Posted by Vanessa Warheit
a resident of College Terrace
on Mar 28, 2016 at 9:30 am

Answering a few of the questions raised in this thread:

City of Palo Alto has a current stated goal of producing 4% of our clean energy locally - which is approximately 30MW. The CLEAN program as it is currently designed and approved by Council maxes out at 3.6MW (0.4% of PA's current load). If we allow the CLEAN program, plus the Net Metering program currently in effect, to reach their maximums, we'll only be at 12MW (i.e. less than half of the city's stated 4% goal).

As Craig Lewis and Tom Kabat have pointed out, locally-generated power is not the same as remote clean power. It's more efficient, raising its value. But in addition to Tom's efficiency calculations, we need to factor in the value of having power HERE in the case of emergency. When the next earthquake hits, or the next storm - or the next flood as the waters inexorably rise in the bay - where will the power come from to power our hospitals, our emergency response teams? Clean power arrays like the one being built over the UUCPA parking lot, with PA CLEAN-enabled financing, can be tied into 'community micro-grids' - which can then be de-coupled from the grid in times of emergency to provide local emergency power. How many cents per kilowatt is that peace of mind worth to us as a community?

This pilot is important because - as I stated to Council last Monday - it allows the city to understand how to encourage local clean energy projects, at ultimately much lower prices. Similar pilot projects have been run in Los Angeles, where the information gleaned led to lower prices and more large-scale local clean power generation. It's also a critical step in setting up a 'community solar' program, which would allow the more than 44% of us who rent our homes in Palo Alto to buy into locally-generated solar power.

We've stated our intention to run this pilot, and need to honor that commitment to making our city clean and resilient. Maybe there are some hard choices the city needs to make in terms of finances - but making those kinds of hard choices is what it means to be a leader.


Like this comment
Posted by An Engineer
a resident of Downtown North
on Mar 28, 2016 at 11:30 am

"Clean power arrays ... which can then be de-coupled from the grid in times of emergency to provide local emergency power."

Maybe you know these answers: To route power from a geographically scattered source like home PV to designated points of use, the city would need to physically disconnect each consumer at its service breaker box, except those intended to receive the power. Do they have a plan for accomplishing that? Has a proof of concept test been done anywhere?


Like this comment
Posted by Tom Kabat
a resident of another community
on Mar 28, 2016 at 12:09 pm

To build on Vanessa Warheit's comment that (if coupled with additional micro-gridding circuitry and perhaps battery storage) a project could provide emergency islanding capability that can keep it energized during a grid outage. Some projects could produce more peace of mind value for the community if they were able to function during grid outages. Maybe that should be further explored by Palo Alto and additionally incented.

So for example, a project without the special backup power capability would still receive a value based feed in tariff. And a project that provided additional public benefits associated with its ability to provide energy (or energy enabled services) to the public during outages would receive an additional incentive. It seems this second incentive could be offered to owners of existing solar PV systems that retrofit micro-grinding capabilities into their facilities and make their energy enabled services available to the public.


Like this comment
Posted by An Engineer
a resident of Duveneck/St. Francis
on Mar 28, 2016 at 1:32 pm

"...a project could provide emergency islanding capability that can keep it energized during a grid outage."

Palo Alto Hardware is one such, but it could not supply its own block, let alone much of the city. A massive external load triage and shedding capability must be in place for it and each participating PV island. Does such a triage ability exist here? Has anybody tried this scheme in a real town?

I agree we should do this, if for no other reason than diesel backup generators at critical facilities have a finite fuel supply. But can we do it now, or what plans exist to implement it?


2 people like this
Posted by SteveU
a resident of Barron Park
on Mar 29, 2016 at 8:13 am

SteveU is a registered user.

Current standards require Grid tied PV installations to Auto-DISCONNECT with the loss of utility voltage for the protection of the line workers.

There is no way currently to 'Island' such a system short of a private inter-tie between members. At least one, must have a Generator to excite the line to trigger connection.


Like this comment
Posted by Curmudgeon
a resident of Downtown North
on Mar 29, 2016 at 3:54 pm

"...Council unanimously approved a solar contract with Hecate Energy Palo Alto LLC that would have the city paying 3.67 cents per kilowatt hour..."

Does anybody know if this rate is charged at the point of generation, or at the point of delivery? If the former, what is it at the latter? The POD price is what the CLEAN solar power purchase cost should be evaluated against.


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