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Solar Growth Trends

Regulation of Solar Services Agreements (SSAs) has emerged as an important issue in supporting solar growth.

Confusingly, Power Purchase Agreement "PPA" is often used in reference to SSAs, however, PPA has long been the term for an wholesale sales agreement between a generator and a utility, but a SSA is actually a retail sales agreement between a solar array owner and the utility customer hosting a solar array.

This arrangement has become the norm, as SSA providers are able to use the available federal tax credits and depreciation, and free the host from tying up capital and taking on the risks of ownership.

By overcoming a number of barriers to customer uptake of solar, SSAs have become the preferred means for the financing solar by commercial customers and the use of solar SSAs is beginning to be seen in residential markets.

Because the use of solar SSAs is so beneficial to the growth of solar markets, IREC has been actively involved in state proceedings addressing participation of solar SSA providers in net metering and regulation of solar SSA providers as public utilities.

State Policies for SSAs

Over the past year, IREC has participated in proceedings in Colorado, Nevada, Arizona, New Mexico, Massachusetts and Michigan that addressed the legal and policy issues surrounding regulation of solar SSAs. 

As part of Michigan's adoption of net metering rules, the Michigan PSC clarified the definition of customer-generator to ensure that SSA providers would be allowed to participate in net metering.

Likewise, Massachusetts clarified in its net metering regulations that net metered systems may be owned by third-parties.

IREC continues to be involved in Arizona and New Mexico's consideration of the matter and anticipates being active in Washington as well.

The solar panels on top of the community center at Colonia San Martin, in Sacramento, CA is the newest project of the housing nonprofit Mercy Housing California, will produce six times more power than the average residential solar electric system. This is the first solar-power system on an affordable housing complex in Sacramento, and the housing complex was built in a partnership with the AIDS Housing Alliance.

An essential part of a total energy solution is to back up solar installations with energy efficiency so that the total amount of energy required for heating, cooling, and water service is optimized...before determining the size of the PV installation required or effective.

Each low income housing unit in this exemplary solar and efficiency project, has high-efficiency water heaters and heating, ventilation and air conditioning systems. The units  also have windows, insulation and radiant heat barriers rated to reduce energy use. The energy efficiency measures exceed California's Title 24 building codes for energy efficiency by at least 25%.  And that's significant because the Title 24 requirements include a 25% savings over conventional construction!

The 12-kilowatt solar PV system will generate an estimated 18,700 kilowatt-hours per year, cutting electric bills at the complex by an estimated $2,000 per year.

The photovoltaic solar system qualified for California state rebates, and SMUD (Sacramento Municipal Utility Department) negotiated a rebate package that helped the developer install the energy-efficient equipment.

An Australian company, Solar24 Inc., has developed a solar thermal system that holds heat for 14 hours, long enough to sustain through a cloudy winter night.  One big problem with solar has always been the retention of the heat overnight.

While sunshine is only available during daylight hours, and no renewable energy source is without drawbacks, all forms of renewable energy can be a useful addition to the general power supply that would eventually stabilize and lower costs.

Wind farms do create a cost issue with transmission, and large commercial size solar installations can have that same drawback -- but so did natural gas and crude oil before the pipelines were built to handle distribution. Transmission solutions are just part of the challenge of energy business.

According to the American Wind Energy Association, the United States added more wind energy to its grid in recent years than any other country, and U.S. wind power capacity grew by 45 percent to 16.8 gigawatts in 2007.

Solar Energy
Solar energy is one of the most abundant and visible renewable resources on Earth. Many national, state, and local governments are engaged in programs to expand programs that enable homes, businesses, and large-scale project developers to make use of this clean energy resource.

Solar power technologies convert radiant light energy to into more usable forms of energy such as electricity or hot water. Photovoltaic cells made from silicon are the most well know, and can leverage mature silicon electronics manufacturing technology to lower their manufacturing cost in order to expand their market reach. Other solar technologies concentrate the sunlight into a small area to heat a working fluid such as water to generate electric power or provide useful hot water for space conditioning.

Ardour Global Alternative Energy Indexes provide investment fund information.

Southern California Edison will install 250 megawatts of solar panels on 65 million square feet of roofs - that’s two square miles - of Southern California commercial buildings at a cost of $875 million. That project will be the nation’s largest solar cell installation.

Enough solar to power 162,000 homes.

In the initial phase of the program, SoCal Edison will lease 607,000 square feet of roof space at ProLogis’ Kaiser Distribution Park in Fontana, California. The area will be used to install and maintain solar panels with the potential to generate enough electricity to power 1,426 households for one year.

At the conclusion of the start-up phase, which will include five to 10 additional installations and is expected to be completed by the end of 2008, the utility will launch its full renewable energy project, aiming to complete 50 megawatts of solar panel installations each year for a total of 250 MW. Each individual installation is expected to comprise one to two megawatts.

“I urge others to follow in their footsteps,” said Governor Schwarzenegger. “If commercial buildings statewide partnered with utilities to put this solar technology on their rooftops, it would set off a huge wave of renewable energy growth.”

SCE hopes to have the first solar rooftops in service by August. The company says it will install at the rate of one megawatt a week.

The program would give a big boost to California’s Million Solar Roofs program and help SCE meet a state requirement to get 20 percent of its energy from renewables by 2010.

Financing Solar Installations

Environmental Leader reported that solar companies are becoming financial intermediaries, leading companies to install solar power that wouldn’t otherwise be able to afford it.

Using a “power-purchase agreement” model, many solar power companies take on the cost of installing solar panels on customers’ roofs. In return, customers pay the solar power company for the panels’ output, generally at a lower rate than they would otherwise pay.

The power purchase model is also attracting bankers - Morgan Stanley, G.E. Energy Financial Services, Goldman Sachs, Wells Fargo, and MMA Renewable Ventures have all arranged financing for recent solar energy projects.

Besides the financing, state incentives and a federal investment tax credit (worth up to 30 cents on the dollar) are also driving adoption.