Designing a Local In-basin Solar Program for Los Angeles
J.R. DeShazo, Director, UCLA Luskin Center for Innovation & Ryan Matulka, Lead Researcher
Outline
1. What is a Feed-in Tariff (FIT)? 2. Why does Los Angeles need a FIT program?3. LABC/UCLA Solar FiT proposal for Los Angeles4. Does Los Angeles have the rooftop capacity to
support this program?5. Is this program cost effective for rate-payers and
DWP?6. Who supports it?
2
•A solar FiT allows homeowners and businesses with solar installations to sell the excess electricity they generate back to the utility for a guaranteed price. •Used in Europe and several jurisdictions in the U.S. to spur local solar development.
Feed in Tariff Basics
Feed-in Tariff Diagram
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FiT transaction
Utility ElectricitySales
Utility
Site Host
FiT vs. Net metering
Insert image of partially covered rooftop
Net metering does not provide any financial incentive to maximize rooftop solar potential.
FiT would be more efficient. Roof top installations would be built to provide the maximum power rather than to only power the buildings below.
Outline
1. What is a Feed-in Tariff? 2. Why does Los Angeles need a FiT program? 3. LABC/UCLA Solar FIT for Los Angeles4. Does Los Angeles have the capacity to support this
program?5. Is this program cost effective for rate-payers and
DWP?6. Who supports it?
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Public benefits of a local in-basin solar feed-in tariff
Spurs economic growth by producing in-basin high wage jobs (particularly in economically depressed areas)
Signals a commitment to attract clean tech businesses to LA.
Creates billions in clean energy investment Allows community to generate local energy for all
Angelinos Quickly generates energy to meet RPS Reduces utility’s out-of-basin transmission
requirements and costs Well-designed program will save rate payers money
over its lifetime
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LA Needs Renewable Energy1. Los Angeles has ambitious renewable energy goals
– Eliminate coal by 2020 (currently, LA gets 40% of energy from coal, mostly out of state)
– 20% by 2010 (DWP audit underway) – 33% (DWP) or 40% (Mayor) by 2020
2. Los Angeles has looming energy generation deficit– Sever cuts this year in DWP future renewable energy
capacity– State laws will cut our future use of coal
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Local Solar Development Creates Jobs
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What types of employment?a. Equipment manufacturers &
assembly: Manufacturing of system components, inverters, solar cells, panels
b. Professional services: Financing of projects, small business loans, debt and equity services, legal services.
c. Installation: system construction and integration
d. System monitoring: Performance monitoring, reporting, operations and maintenance
Outline
1. What is a Feed-in Tariff? 2. Why does Los Angeles need a FiT program? 3. LABC/UCLA Solar FIT proposal for Los Angeles4. Does Los Angeles have the capacity to support this
program?5. Is this program cost effective for rate-payers and
DWP?6. Who supports it?
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The LABC/UCLA Solar FiT Proposal
At least 600 MW phased over at least 10 years- Cost neutral; long term savings over time.
• 50 mw Residential and Small Commercial• 350 mw Multi-family and large Commercial Industrial• 200 mw Small scale in-basin utility
Tariffs (contract rates paid by the DWP) re-evaluated every 1-2 years
Easy and low cost application. DWP acts in timely, fair & transparent fashion.
UCLA estimates 11,000 direct and 7,000 indirect jobs created in Los Angeles.
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Structure For 600 MW Program
CategoryEligible
Systems Typical ParticipantsInitial Tariff
per kWhCapacity Allocation
Small-scale Rooftops
Less than 50 kW
Single family homes, small office & retail, apartment buildings
$0.34 50 MW
Large-scale Rooftops
50 kW and Greater
Warehouses, distribution facilities, light manufacturing, industrial
$0.22 350 MW
All Ground Mounted
Ground-mounted systems
Large commercial and industrial parcels.
$0.16 200 MW
Why target large-scale residential, commercial and industrial rooftop?
• Federal tax incentives lower installation costs.
• Larger roof-tops enjoy economies of scale: produce energy more cheaply.
• Jobs are created more cost-effectively.
• Allows DWP to pay lower tariffs thus lower impacts on rate payers.
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Outline
1. What is a Feed-in Tariff (FIT)? 2. Why does Los Angeles need a FIT program?3. LABC/UCLA Solar FIT for Los Angeles4. Does Los Angeles have the rooftop capacity to
support this program?5. Is this program cost effective for rate-payers and
DWP?6. Who supports it?
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Where is the greatest physical solar potential?
Capacity (MW) 1.Commercial and Industrial 2,2182.Single family homes 1,7523.Multi-family homes 1,4114.Government/non-profit 156
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Physical Potential LA County (19.13 GWs)
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12,282
5,536
307 278 197 245 169 1040
2,000
4,000
6,000
8,000
10,000
12,000
14,000
SoCal Edison
LA Dept of Water & Power
Vernon Light & Power
Glendale Water & Power
Pasadena Water & Power
Burbank Water & Power
Cerritos Electric Utility
Azusa Light & Power
Rooftop Solar Potential - Utility Service Area in Los Angeles County
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LA County Solar Map
Megawatts of Physical Rooftop Solar Potential by City Council District
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670
524
436 432 422 412 391357 356
324283 278 256
210 186
0
10,000
20,000
30,000
40,000
50,000
60,000
0
100
200
300
400
500
600
700
800
Los Angeles City Council Districts
Megawatts Parcels
Outline
1. What is a Feed-in Tariff (FIT)? 2. Why does Los Angeles need a FIT program?3. LABC/UCLA Solar FIT for Los Angeles4. Does Los Angeles have the rooftop capacity to
support this program?5. Is this program cost effective for rate-payers and
DWP?6. Who supports it?
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Avg Tariff Paid Out
Year 1 2 3 4 5 6 7 8 9 10
Avg. Tariff
$0.21 $0.20 $0.20 $0.19 $0.19 $0.18 $0.18 $0.17 $0.17 $0.17
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
Program Year
Utility Avoided Costs (Program Benefits) at 3% Annual Escalation
Utility Avoided Costs (Program Benefits) at 4% Annual Escalation
Utility Avoided Costs (Program Benefits) at 5% Annual Escalation
Weighted Average Tariffs Paid Out
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Projected Percentage Increase in DWP Energy Price Increases Over Six Years Needed to Meet its CostsPrice Per MWh for Each Customer Class
2008 2009 2010 2011 2012 2013 2014Residenital 107$ 118$ 10% 126$ 7% 143$ 13% 150$ 5% 157$ 5% 165$ 5%Small Business 119$ 131$ 10% 140$ 7% 157$ 12% 165$ 5% 174$ 5% 183$ 5%Med. Business 109$ 120$ 10% 129$ 8% 145$ 12% 153$ 6% 161$ 5% 170$ 6%Large Business 93$ 104$ 12% 113$ 9% 129$ 14% 136$ 5% 143$ 5% 150$ 5%System Average 102$ 112$ 10% 122$ 9% 138$ 13% 146$ 6% 153$ 5% 160$ 5%
Cumulative Increase 57%Avg Annual Increase 8%
Source: Department of Water and Power presentation, Energy Adjustment Cost Factor, 2010
Market Sector Case Studies with Layered Solar Incentives
Case studies evaluated:1) 200kW Commercial System2) 36kW Small Commercial System3) 4kW Residential
Layering incentives used:» 30% Federal Tax Credit» State Tax Credit (Enterprise Zone)» Feed In Tariff (after tax)» Depreciation: Fed and Net State
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200 kW Commercial System
•Contract Price $(1,197,071)•State Tax Credit(Enterprise Zone) $62,248•30% Federal Tax Credit $359,121•Depreciation: Fed and Net State $424,912•Feed In Tariff (after tax) $840,269•Net Profit (20 Years) $489,479
Assumes $.22/kWh Feed-In Tariff
200kW Commercial System
36kW Small Commercial
• Contract Price $(244,804)
• State Tax Credit(Enterprise Zone) $14,321• 30% Federal Tax Credit
$73,441• Depreciation: Fed and Net State $84,896• Feed In Tariff (after tax)
$227,303• Net Profit (20 Years) $157,157
• Assumes $.34/kWh Feed-In Tariff
36kw Small Commercial System
• Contract Price $(19,120)
• 30% Federal Tax Credit $5736• Feed In Tariff (after tax revenue)
$27,608• Net Profit (20 Years) $14,224
• Assumes $.34/kWh Feed-In Tariff. • Modeled by UCLA on a 4kw DC system at ($4.78 per Watt installed) by
Martifer Solar USA.
4kW Residential System
Outline
1. What is a Feed-in Tariff (FIT)? 2. Why does Los Angeles need a FIT program?3. LABC/UCLA Solar FIT for Los Angeles4. Does Los Angeles have the rooftop capacity to
support this program?5. Is this program cost effective for rate-payers and
DWP?6. Who supports it?
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Coalition endorsing 600MW Solar FIT for LA
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AECOM Allen Matkins Arden Realty, incBank of AmericaCBRE Cedar Sinai Medical CenterEnergy Choice, Inc.G and C Equipment Corporation Global Green Holland & KnightJones Lang LaSalleJP MorganKahn SolarKYOCERA Solar, Inc. LA CountyLACCD Latham & Watkins Los Angeles Area Chamber of CommerceLos Angeles World AirportsMacerich
Parsons Parsons BrinckerhoffPsomasFMGSheppard Mullin Siemens Sierra Club SolarWorld Trammell CrowTurner Construction UCLA School of Law UCLA School of Public Affairs Union Roofing Contractors Assn.Suncal Companies WattWestfield
CITY COUNCIL LEADERSHIPEric Garcetti, Council President, City of LAJan Perry, Council President Pro Tempore, City of LAPaul Koretz, Councilmember, City of LA
FOUNDING SOLAR WORKING GROUP MEMBERS
BUSINESS, NON-PROFIT, ENERGY INDUSTRY, AND UNION LEADERSHIPGary Toebben, President, LA Area Chamber of CommerceMichelle Dennis, President, BOMABill Corcoran, Western Director, Beyond Coal Campaign, Sierra Club Susan Kateley, Executive Director, Cal SEIAMary Luevano, Director, Policy & Legislative Affairs, Global Green USA Stephanie Klasky-Gamer, President & CEO, L.A. Family HousingRonald Johnston, PhD, Executive Director, Union Roofing Contractors Assn.Nicci Solomons, Executive Director, AIA|LAAndy Lipkis, Executive Director, TreePeopleLance Williams, Executive Director, USGBC-LA
LA’s Solar FIT Timeline• November 2008: Mayor Villaraigosa introduces LA City’s Solar Plan:150
MW proposed under program
• September 2009: LABC and UCLA created a Solar Working Group of leaders in the private, environmental and educational sectors to investigate the promise of a Feed-in Tariff (FiT) policy in Los Angeles.
• November 2009: LADWP proposed a limited, fixed and floating FiT program to its Board of Commissioners
• August 2009: LADWP Solar Development Group proposes Solar FIT as part of Renewable Portfolio Standard
• March2010: Mayor introduces Renewable Energy and Efficiency Trust Fund that is expected to generate 18,000 jobs over ten years and establish a local green economy. The Trust Fund will specifically invest in two types of programs: energy efficiency and a solar feed-in tariff.
• April 2010: the City Council adopted a motion affirming its position that the modification of the energy cost adjustment factor should include a renewable fund for the sole use of energy efficiency and renewable energy procurement programs.
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LA’s Solar FIT Timeline• April 2010: In an earth day press release the LADWP announces its intent
to enact a Solar FIT: “LADWP also expects to launch a feed-in tariff program this year, enabling third-party solar providers to sell energy to LADWP at a set price.”
• June 2010: LADWP presents Strategic Plan Presentation to Business Customers which includes provisions for a Solar Feed-in Tariff
• June 2010: LABC with the UCLA Luskin Center for Innovation, AIA|LA, BOMA of Greater Los Angeles, California Solar Cal SEIA, Global Green USA, Los Angeles Area Chamber of Commerce, Los Angeles Family Housing, Sierra Club, Union Roofing Contractors Association send letter to City Council urging them to support a 600 MW Solar FIT program.
• July 2010: LABC/UCLA present 600MW Solar Feed-in Tariff policy proposal to the City Council Energy and Environment (E2) Committee. Chairwoman Jan Perry instructs Chief Legislative Analyst (CLA) to evaluate the merits of the study and provide recommendations back to E2 on September 21st.
• September 2010: Chief Legislative Analyst reports back to E2 with analyses of LABC/UCLA 600 MW Feed in Tariff policy proposal
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Next steps:
• Continue to gather community input and support for the LABC/UCLA Feed-in Tariff proposal•UCLA produces policy implementation recommendations for phase three of solar FIT study• City Council votes on solar FIT proposal
Background & supporting Slides
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LABC/UCLA 600 MW Solar FiT Study Author
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J.R. DeShAzo, Primary AuthorJ.R. DeShazo is Professor of Public Policy at the University of California at Los Angeles where he is an expert in economics, public finance and organizational governance. He is the Director of UCLA Luskin Center for Innovation, a cross-campus center focused on environmental sustainability. He also directors the Ralph and Goldy Lewis Center on Regional Policy, the largest endowed center within the UCLA School of Public Affairs. He previously served as a Research Associated at the Harvard Institute for International Development. He received a Ph.D. from Harvard University and a Master from Oxford University where he was a Rhodes Scholar.
DeShazo’s recent research has focused on local public finance, regulatory reform, climate change policy, and valuing the health impacts of environmental policy. He has lead research and policy reform initiatives funded by the National Science Foundation, Environmental Protection Agency, Health Canada, the World Bank, Global Environmental Fund and several state agencies. He has advised the US Environmental Protection Agency, the National Science Foundation, the World Bank, United Nations, the Ford Foundation, the McArthur Foundation and various international organizations.
Programs meets 3% of DWP RPS Goaland Offers GHG Benefits
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
Program Year
Feed -in Tariff Program GHG Benefits
Annual Avoided GHG - Coal Scenario Annual Avoided GHG - NG Scenario
Total Program GHG Benefits Coal Scenario Total Program GHG Benefits NG Scenario
Solar PV Module Prices:2.8% Annual Decline since 2001
Source: Solarbuzz.com
U.S. Natural Gas Wellhead Prices: 8% Annual Escalation Since 1970
Source: U.S. Energy Information Administration
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