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California’s Role in the Rapidly Expanding Community Solar Market

Andrea Romano — October 28, 2015

Community solar (also known as shared solar) has become a hot topic across the United States over the last couple of years as residences and businesses seek alternatives to conventional energy sources. According to a National Renewable Energy Laboratory (NREL) report released in April, about half of all homes and businesses in the United States cannot host a PV system of adequate size on their property. The community solar market has the potential to increase PV deployment by 5.5 GW-11 GW from 2015 to 2020.

Today, 13 states and the District of Columbia have shared renewables policies in place, and many other states are considering programs. Utilities across the country are embracing community solar, viewing it as an opportunity to retain their customers and compete against the burgeoning self-generation solar PV market by providing a utility 100% solar option. Navigant colleague Richelle Elberg discussed one such project in a blog earlier this month detailing how Tucson Electric Power’s Residential Solar Program is a win-win for solar proponents and utilities.  

Navigant Consulting is currently collaborating on the Community Solar Value Project, one of 15 projects chosen for funding in 2015 by the U.S. Department of Energy’s SunShot Initiative under its Solar Market Pathways Program. The project aims to increase the scale, reach, and value of utility-based community solar programs through project design and the integration of demand response and storage.

California’s Role

California is one of the four states paving the way. In late 2013, the California state legislature signed into law Senate Bill (SB) 43, the Green Tariff Shared Renewables (GTSR) Program bill. The GTSR Program is intended to expand access to eligible renewable energy resources to all ratepayers who can’t access the benefits of onsite generation and to also create a mechanism where customers can meet their electricity needs from eligible renewable energy resources. SB 43 set a statewide program cap of 600 MW as well as utility caps. It required California’s investor owned utilities (IOUs) to propose a voluntary shared renewables program to the California Public Utilities Commission.

SB 43 Utility Program Caps

Andrea Blog Table

(Source: Navigant Consulting)

Decision 15-01-051, published on January 29, 2015, established the steps for California IOUs to implement the GTSR Program, including outlining the two program components:

  • Green Tariff (GT): Under a GT, a customer pays the difference between their current generation charge and a charge that reflects the cost of procuring 50%-100% of solar generation for their electric needs.
  • Enhanced Community Renewables (ECR): Under an ECR, a customer agrees to purchase a share of a local solar project directly from a solar developer in exchange for a credit from their utility for the customer’s avoided generation procurement and for their share of the benefit of the solar development.

The rate design approved by this decision ensures that utility customers not participating in the GTSR Program do not bear any of the costs of the program, an important point of discussion at utilities developing shared solar programs across the country. All Renewable Energy Certificates (RECs) from GTSR projects are transferred to the IOUs for retirement on behalf of participating customers. Many community solar programs currently do not retire the RECs on the customer’s behalf, which may become a point of greater discussion in the future.

Projects are to be located within the IOU service territory and within reasonable proximity to participants of the GTSR Program. GTSR projects should be sized between 500 kW and 20 MW, with smaller projects considered at a later program phase.

Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric are currently in the process of rolling out their programs. Once launched, the programs will be open to new subscribers until January 1, 2019, or until the individual utility capacity caps are met.

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