CLEAN LA SOLAR PROGRAM LADWP FEED-IN TA R I F F Mary Leslie, Los Angeles Business Council
Agenda 1. The Context: Clean energy and policy landscape in California 2. Review of LADWP Feed-in Tariff Program 3. Program Status and Challenges 4. Next Steps 2
California s Statewide Climate Action 2006: California s Global Warming Solutions Act (AB 32) 2015 Established a goal to roll back emissions to 1990 levels by 2020 Launched California s landmark Cap and Trade program AB 32 Scoping Plan set forth strategies in a multi-sector approach Utilities mandated to generate 33% of their electricity from renewables SB 32 (Pavley) proposes to continue this legislation beyond 2020, and make CA s goal for 80% reduction below 1990 levels by 2050 into law. SB 350 (de Leon) propose interim goals for 2030 that require utilities to meet a 50% renewable portfolio standard by 2030. 3
4 California s energy transformation is a driver for investment and innovation in clean technology
Germany and California: World leaders in renewable energy investment 5 Source: Next 10. 2015 Green Innovation Index. www.next10.org
Los Angeles Local Solar Goals Mayor Eric Garcetti s Sustainable City plan Install 400 MW rooftop solar by 2017, with 600 MW more under construction 1,500 MW of local solar by 2025 LADWP s 2014 Integrated Resources Plan 800 MW of local solar by 2020 Assumptions based on a 40% RPS goal by 2030 6
LADWP 150MW Feed-in Tariff (Adopted 2013) A Solar FiT program allows businesses and property owners to generate energy through rooftop solar panels, and then sell the power to the LA Department of Water and Power (DWP) to be added to the city s power grid. The LABC worked with UCLA and USC to study the program, set a price and compile a list of best practices, comparing FiT programs across Europe and the United States. As of February 2015, all 150MWs of the program s capacity have been offered by the LADWP Board of Commissioners to project applicants through a 100 MW fixed-price program and a 50 MW bundled FiT, making it the largest Feed-in Tariff program in the nation. 7
FiT 100 Program Design Goal of 100 MW installed by 2016 Based on a first come, first served basis In case of oversubscription, lottery drawing for waitlisted projects Pricing: First Tranche: 20 MW at 17 cents / kwh Second Tranche: 20 MW at 16 cents / kwh Third Tranche: 20 MW at 15 cents / kwh Fourth Tranche: 15 MW at 14 cents / kwh Fifth Tranche: 25 MW at 13 cents / kwh 8
FiT 100 Program Status LADWP is closing in on the first 20 MW benchmark. There are now 14 projects interconnected and a total of 7.1 MW in-service. There are currently 28 contracts executed that are awaiting or undergoing construction, totaling 11.25 MW. Currently 48 MW are active in the pipeline, according to the newest UCLA study. An additional 32 MW are on the waitlist. 9 Note: From data release of June, 2015
Bundled FiT 50 Program Design and Status As part of an agreement made between LADWP and two solar companies to build the 250 MW Beacon Solar Project north of Mojave, CA, developers will procure 50 MW of local solar distributed generation. Contracts were awarded to two developer teams at an average FiT50 price of $0.124 per kwh Sun Edison / PermaCity (22 MW FiT) Hecate / Absolutely Solar (28 MW FiT) The first 11 MW of the bundled FiT is due to be placed in-service by December 2015, and the remaining 39 MW by December 2016. 10
Key Economic Benefits of 150 MW FiT Create 4,500 new jobs $562.5 million private investment in Los Angeles Leverage $300 million in federal tax credits 2.6 million metric tons of avoided CO2 Equivalent to removing half a million cars from Los Angeles roads Power over 240,000 homes New opportunities for business growth and innovation i.e. PermaCity s Forever 21 project utilized a unique racking system invented and manufactured locally 11
Key Benefits to Property Owners 20 year return on investment Increased property values Investment tax credit and accelerated depreciation Owners of multiple properties/companies can enter joint ventures for other entities to receive tax benefits Solar contractor s warranty and maintenance contracts will cover most future roof maintenance Some solar providers are finding new, creative ways to sweeten the deal for property owners 12
Driving investment where it s needed most 40% of all installed or active capacity falls within solar equity hot spots, defined as US census tracts in the: Bottom 1/3 of household income and Bottom 1/3 high school graduation rates Top 1/3 unemployment rates and/or Poorest air quality in the State (scoring in the top 10% in CA EPA s CalEnviroScreen) 13
When it Works PermaCity s Forever 21 Project 5.1 MW (Net Metering + FiT)- the largest rooftop solar installation in LA Utilized racking system manufactured locally & invented by PermaCity Interconnected in January 2015, it will generate enough energy to power approximately 1,450 homes and avoid the annual production of 12 million pounds of carbon dioxide- equivalent to taking 1,200 cars off the road 14
When it Works Southern California Trophy Company 134.4 kw system on the roof of a family owned commercial business. Interconnected in November 2013, it is Downtown Los Angeles first solar installation Model for other small businesses to turn a roof into an innovative investment 15
Challenges Pricing LADWP offers lower prices than most of all the comparable North American FiT programs. Application lottery Applications are accepted on a first come, first serve basis. Once accepted the projects are placed into a lottery to determine the ranking on the Review Priority List, rather than ranking based on project viability. Applicants not selected in the lottery are placed on the waitlist. Attracting and retaining financing for viable waitlisted projects Interconnection study and costs According to the LABC s initial evaluation of the FiT 100, the high cost of interconnection represented a source of uncertainty and insecurity for the applicant. Long wait times executing contracts Competing with a well-established net metering (NEM) program Over 114 MW of NEM installed in LADWP territory with a goal to install 280 MW by 2016 16
17 Private industry has stepped up to challenge
But attrition rates have been high 35 Capacity Lost (MW) 30 25 20 15 61% of applications drop out 52% of applications drop out 41% of applications drop out 10 5 0 20% of applications drop out Tranche 1 Tranche 2 Tranche 3 Tranche 4 18 In all 5 tranches of the FiT 100, approx. 191 MW applied and 91 MW have canceled
Addressing problems with waitlist management Project Status per Tranche (as of June 2015) 19
Summary and Next Steps Los Angeles Mayor Eric Garcetti has committed to expanding the FiT, announcing a short term goal of installing 400 MW of rooftop solar by 2017 and long term goal of up to 1,500 MW of local solar by 2025. The LADWP has taken steps to streamline the application and implementation process: automating application and project tracking via a web-based platform and automating a voucher system for FiT invoices and payments. City Planning adopted a Master Conditional Use Permit, streamlining the permitting process for rooftop and carport solar FiT projects. The LADWP has hired 15 more full-time staff dedicated to the FiT. The LADWP is reviewing new approaches to the program s wait list to prioritize projects by operational viability and economic benefits. LADWP s Integrated Resources Plan authorizes a 300 MW expansion to FiT capacity by 2020; with a goal for 800 MW of local solar capacity. Moving forward, it is critical that the LADWP continue to research and expand best practices as this successful solar program grows. 20