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Solar Power Fuels Optimism for Meeting Energy Demands by Edie Lau The Sacramento Bee, March 21, 2001

If money didn't matter, the sun could meet all the electricity demands in the Golden State and then some.

Captured from rooftops, yards, parking lots and open land near transmission lines, solar energy could produce 68,000 megawatts of power, according to a California Energy Commission analysis. That's a comfortable surplus over the 45,000 or so megawatts the state uses at its summertime peak.

It doesn't take a power expert to recognize the potential. "There's an energy source right there that you can use, and it's just, like, going to waste," said Earl Hamilton, a retired Air Force flight engineer who is on a waiting list for installation of a solar system on a home he's buying in Elk Grove.

Money does matter, of course. Harnessing the sun's power remains expensive, and that partly explains why a state generally flooded with sunlight uses a negligible fraction of it for electricity, amounting to less than one-half of 1 percent of its total power generation.

But the economics of power is changing, and fast. The sharply rising cost and scarcity of electricity in California are heightening interest in renewable power sources such as solar and wind. At the same time, market chaos threatens to undercut that opportunity.

"It's a scary time for renewables," said Kelly Lloyd, chief financial officer of enXco Inc., a California generator that makes power from wind.

The problem for enXco and other renewable-energy companies is this: For several months, the state's major investor-owned utilities — Pacific Gas and Electric Co. and Southern California Edison — have paid them little to nothing for the electricity the utilities have contracted to buy.

Five generators warned last week that, as a result, they will not be able to pay their local property taxes due in April.

These companies and similar generators of renewable energy are supposed to receive preferential treatment, as makers of efficient, clean electricity. Federal rules obligate the private utilities to buy all the power they make.

But in the market upheaval caused by soaring natural gas prices and tight power supplies, renewable energy companies have fallen through the cracks. A state law authorizing the Department of Water Resources to buy electricity on behalf of the utilities — and to pay the generators — left out the renewable companies.

Discussions are ongoing in the Capitol to deal with the problem.

Renewable generators collectively supply about 10,000 megawatts of power, but because of the money problems that capacity is shrinking, said Steven Kelly, policy director for Independent Power Producers, a trade group. "We're familiar with at least 1,200 (megawatts) that we think has backed down or shut off," Kelly said.

In other respects, green energy is flourishing. The same law that in 1997 deregulated California's electricity market created state subsidies for renewable power, paid for by customers of the private utility companies.

Marwan Masri, manager of the program administered by the California Energy Commission, said the fund will total $540 million by the end of the year, and will help bring about 1,000 megawatts of new power sources in California by year's end.

Almost half the new energy will be generated by wind turbines. Landfill gas, sewage system gas, biomass and small hydroelectric systems also will contribute.

One of the companies erecting new wind turbines with the help of the subsidy is FPL Energy of Florida. FPL already has wind farms in the Altamont Pass and Tehachapis, and is one of the companies that hasn't been paid by the utilities.

FPL spokeswoman Carol Clawson said the company is willing to invest in new generation because it's confident the crisis will pass.

"We believe that ultimately it will be worked out, and so there's no reason to totally abandon California as an energy provider," Clawson said. "We ... want to be part of California's energy future."

Others in the energy business also are investing in renewable sources. The Sacramento Municipal Utility District has a small wind farm near Rio Vista that generates about five megawatts of electricity, and is considering adding another 10 megawatts, said Assistant General Manager Jim Shetler.

On the Oregon-Washington border and in Nevada, two enormous wind farms are in the planning stages, according to the American Wind Energy Association. Together, they'll generate 560 megawatts and will be the largest wind farms in the world. San Francisco is considering installing 50 megawatts' worth of solar panels.

Builders are showing interest, too. Dave Hood, a Placer County home builder and owner of Coldwell Construction, is installing solar shingles on all 11 houses in an upscale development called Loomis Ranch. The shingles are a new product that incorporates solar cells in the roofing material, and are thought by many to be more attractive — albeit more expensive — than the old-style roof-mounted panels.

Hood said the systems constitute $25,000 to $50,000 of the sales price of the homes, which cost $700,000 and up. The systems will generate an estimated 50 to 90 percent of the households' electricity needs.

"We don't need these massive power plant structures," said Hood, who plans to move into one of the homes. "We can do it on an individual basis."

Many others appear to be thinking the same thing.

One aspect of the state's subsidy program helps residents and small businesses buy on-site energy systems, usually solar. In the past two months, sign-ups have surged — from 50 applications a month last year to 200 to 250 a month currently.

"We're really scrambling now to meet the demand," Masri said.

The biggest barrier to date for solar technology is its high initial cost, Masri said. Once installed, it's cheap to operate. "No fuel (purchases) to worry about," he said. "Maintenance is minimal."

The subsidy amounts to one-third the cost. A typical household solar system, sized to generate up to two kilowatts of power, would cost about $18,000, Masri said, of which the state would pay $6,000.

Because the state subsidies are funded by the private utilities, they're available only to customers of those utilities. SMUD has its own solar subsidy program. It, too, has become suddenly popular.

Frank and Stacey Quadro had a solar system installed Thursday on their house in Carmichael. It was overcast outside, but even still, the Quadros watched their meter run backward for a while, meaning they were generating more electricity than they were using. The unused power goes onto the state power grid, and the Quadros get credit for it on their bill.

They expect the system, which cost them $5,900, to cut their monthly SMUD bills in half; under current SMUD rates, it would pay for itself in 16 years.

SMUD anticipated adding 100 participants to the program this year, but in short order has amassed a waiting list of nearly 500, said spokeswoman Dace Udris.

Historically, one of the stumbling blocks to production of renewable energy on a more widespread scale has been price. Power generated from the sun costs about 10 to 12 cents a kilowatt-hour, according to SMUD's Shetler. Until the market went haywire last year, that was more than double the going rate of electricity produced by more traditional sources.

It's also worth noting that it wouldn't be practical to rely entirely on solar energy because, after all, the sun goes down every day. Wind, similarly, is an intermittent power source, although a handy one in California, as it tends to blow hardest in summer when the temperature difference is greatest between the coast and interior.

"We will never, nor should we ever, rely on (just) one source," said Masri.

Of course, the state's a long way from relying on either solar or wind as a sole source. Hamilton, the retired engineer on SMUD's waiting list for solar panels, wishes the money the state is pouring into the energy crisis could be used instead to expand solar use. The state has committed about $40 billion for long-term electrical contracts to date.

"I just think, all this money that (Gov.) Davis is spending, if he'd just give people some incentive to put solar systems on their houses, that would be more wisely spent," Hamilton said. "We wouldn't even have an electrical problem in California."