Solar energy is surging in California, as lower prices power an expansion expected to last at least eight years.
Sun-generated electricity by 2020 is projected to make up an average 11 percent of all power sold by Golden State-based utilities Pacific Gas and Electric Co. (PG&E), Southern California Edison Co. and San Diego Gas Electric Co. (SDG&E). That is without small-scale rooftop solar, which utilities cannot count as part of what they need to fulfill the state's green power mandate.
While 11 percent might sound like a small slice of the power pie, hitting that point will represent major growth, said Adam Browning, executive director of Vote Solar, a San Francisco-based nonprofit.
"Let's not underestimate 11 percent," Browning said. "That's actually a huge amount. That's a massive, massive investment. You're talking about a major shift in resources and in money going from fossil fuels to renewable energy."
The growth is expected to come rapidly. Solar last year made up about 1 percent Edison's portfolio and a fraction of 1 percent of PG&E's. There was no solar in SDG&E's electricity sales.
The expansion is part of a trend happening in California and beyond, said Ryan Wiser, a staff scientist at Lawrence Berkeley National Laboratory.
"The cost of the underlying product has plummeted over the last three to four years," Wiser said. The decline "is driving interest certainly in the southwest portion of the country, but in other parts of the country, as well."
Nationally, solar is growing at "an unprecedented rate," reported the Solar Energy Industries Association, a trade group for the sector. California leads the country in terms of homes powered in part by solar. New Mexico, Hawaii and Colorado are next in line.
Within California, state regulations have helped fuel the increase. California's renewable portfolio standard (RPS) is one of the most aggressive in the country, requiring that utilities by 2020 draw one-third of their electricity from green sources. All three utilities say they expect to meet that target.
"The RPS is crucial," said Ken Zweibel, director of the GW Solar Institute at George Washington University. "It wouldn't happen without the RPS."
A tricky target to hit
Gov. Jerry Brown (D) and his supporters argue that the standard is driving investment and spurring job creation. Critics contend that environmental hurdles will make it difficult to reach the 33 percent goal and that the state's transmission system will need expensive upgrades.
The state's power manager, the California Independent System Operator (ISO), said that while there are plans to add transmission lines, renewables can be folded in at that one-third level without taxing the grid.
California, however, will have to juggle what have been conflicting mandates in its quest to be greener.
The RPS is intended partly to reduce use of fossil fuels, Wiser said. That has worked in some cases too rapidly. As utilities added green power, at least one natural gas power plant found itself without enough customers to stay open. Sutter Energy Center in Yuba City, Calif., earlier this year said it would close.
The ISO sounded an alarm, saying the facility -- because it can ramp up and down quickly -- was needed to help keep the lights on (Greenwire, March 21). At the ISO's urging, the California Public Utilities Commission ordered the three utilities to buy enough power from Sutter to keep it operating (Greenwire, May 8).
"In order to ensure the success of renewables especially during this transition period, we need to have a certain amount of conventional resources available," ISO spokeswoman Stephanie McCorkle said. "You need to make sure that the reliability is maintained throughout the transition."
Improvements in storage for renewable power could help speed expansion, Wiser said, but that isn't crucial to hitting the one-third green power target. Adding storage also would drive up the cost, he said, and there are better ways of integrating green power, including incentives to shrink demand.
"The bottom line is, one never strictly needs storage," Wiser said. "It's going to be an economic decision in the end."
Solar vs. wind
The road to reach the state's RPS mandates has been bumpy.
California's RPS initially required 20 percent renewables by 2010, but utilities failed to meet that goal. The state's Legislature moved the deadline and asked utilities to average that level for the period between 2011 and next year. All three met or neared the mandate this year (ClimateWire, March 8).
The drop in the price of solar quickened the pace of adoption, Zweibel and Wiser said. Solar has fallen from about 20 cents per kilowatt-hour a few years ago to between 8 and 15 cents now.
Utilities project that they will have the larger amounts of solar based on long-term contracts they have signed.
Solar supporters have warned that some of those contracts typically fall through. Lynsey Paulo, spokeswoman for PG&E, said that happens less now with the maturation of the industry. Utilities also include buffers, she said.
"That's why you sign more contracts than you need," Paulo said. "You build in a little wiggle room."
Utilities also can switch from large projects -- which have greater risks in financing and environmental hurdles -- to smaller ones, said Browning with Vote Solar. California has a few market mechanisms to advance those, including a kind of feed-in tariff for renewable energy contracts up to 20 megawatts.
Solar will become a bigger part of meeting the renewables mandate, utilities said.
For PG&E, solar by 2020 will balloon up to 40 percent of its green energy mix from the current 1 percent. Edison expects it to grow to 27 percent from what now is 6 percent. SDG&E will hit 34 percent, up from zero.
The expansion of solar will upend the current green power hierarchy in some parts of California. Wind has been dominant for PG&E and SDG&E. It is second behind geothermal for Edison.
By 2020, wind will shrink to 23 percent of PG&E's renewable portfolio from its current 31 percent share. Wind is growing, too, Paulo said, but solar will grow more rapidly.
Wind will stay the top renewable for SDG&E at 57 percent of the green power pie, compared with its current level of 59 percent.
Solar still is more expensive than wind, which runs 4 to 10 cents per kilowatt-hour, Zweibel said. Solar has other benefits, he said.
"Solar is especially valuable, more valuable than wind because of the fact that it's produced during the middle of the day" when there is demand, Zweibel said. "You don't necessarily want the wind when it's blowing in the middle of the night."
A spokesman for the wind industry said the sector also has experienced a drop in cost.
"That makes both wind and solar great options for stable-priced power for Californians," said Peter Kelley, a spokesman for the American Wind Energy Association. "It's about diversifying California's energy mix away from being overly reliant on natural gas -- which historically has had the most volatile of energy prices."
Wind is seeing expansion in California, Kelley said, and also is growing elsewhere.
Natural gas, at 6 to 9 cents per kilowatt-hour, remains less costly than solar, Zweibel said, but it historically has experienced sharp price swings. Solar, he agreed, "is a good hedge against price fluctuations of natural gas."
Price still falling
Utilities said the lower price of solar has been a major boost.
"Because there has been a decline in panel costs over the past year or two, that has allowed solar to grow and become more competitive," said Jennifer Ramp, a spokeswoman for SDG&E.
SDG&E said it will be able to add solar with the completion of its $1.9 billion Sunrise Powerlink, a controversial line connecting San Diego and Imperial Valley, Calif. That was needed to carry renewable power from the desert areas, Ramp said.
"The Sunrise Powerlink really opened up the Imperial Valley market for solar development, and developers responded," Ramp said. "Once the project was approved in December 2008, that signaled a clear path to get solar and wind energy from Imperial County to San Diego.
"Since then, we have signed several contracts for more than 1,000 megawatts of solar and wind power in Imperial County," Ramp added. "Those projects are expected to come online starting next year."
Eighteen renewable projects under contract to PG&E are under construction, Paulo said, totaling about 2,400 MW of capacity. That amount will power roughly 2.4 million homes, the state's grid manager said.
The price decline in solar is likely to continue, said Zweibel with GW Solar Institute. Improvements in technology along with greater adoption will cut costs, he said.
"There are curves that show solar dropping 20 percent with every doubling of volume," Zweibel said, and that has happened for the past 30 years.