California Approves $2.9 Billion Solar Energy Initiative

January 18, 2006

The California Public Utilities Commission (CPUC) approved the 10-year, $2.9-billion California Solar Initiative on January 12th. The goal of the program is to increase the amount of installed solar capacity on rooftops in the state by 3,000 megawatts by 2017. The funds will initially go toward rebates on solar power systems, starting at $2.80 per watt and decreasing by about 10 percent per year. The CPUC will soon extend the rebates to solar hot water and solar heating and cooling systems. In addition, parts of the initiative will focus on new housing; low-income customers and affordable housing; and research, development, and demonstration activities. The new initiative earned immediate praise from the Solar Energy Industries Association (SEIA). See the CPUC press release and Web page and the SEIA press release.

The CPUC is also encouraging large-scale power production from solar thermal energy. In December, the CPUC approved a contract for San Diego Gas & Electric Company (SDG&E) to buy 300 megawatts of solar power from Stirling Energy Systems. The company plans to build an array of Stirling solar dishes on a three-square-mile site in California's Imperial Valley. The solar dishes use a dish-shaped array of mirrors to focus the sun's energy on a Stirling engine, which converts the heat into electricity. SDG&E also has options on two future phases that could add an additional 600 megawatts of solar power. The CPUC had previously approved a contract for Southern California Edison to buy power from a 500-megawatt solar power plant near Los Angeles, also to be built by Stirling Energy Systems. See the press release from SDG&E's parent company, Sempra Energy.

Unfortunately, having a contract in hand does not necessarily mean a renewable energy project will actually be built. In fact, a new report prepared for the California Energy Commission (CEC) concludes that utilities should expect at least 20 to 30 percent of their renewable energy contracts to fail. See the report on the CEC Web site (PDF 851 KB). Download Adobe Reader.