Welcome to the solar century

Not that long ago, roof-top solar systems were a type of expensive hobby for environmentally minded folks who could cough up the dough to soothe their own consciences. Large-scale use of photovoltaics (PVs) by utilities just wasn’t cost-effective in a world awash in cheap oil and natural gas.

But the energy crisis in California is starting to make solar look a lot more attractive. And the Sacramento Municipal Utility District (SMUD) has long been ahead of the curve when it comes to promoting solar energy, and has garnered international recognition for its efforts to bring affordable solar power to market.

We talked to SMUD’s solar guru, Don Osborn, about the future of solar in Sacramento and the rest of California.

Are you seeing more interest in solar because of the energy crisis?

Not only are many more people interested in solar, but the depth of that interest is much more profound. We’ve been somewhat overwhelmed by the volume of interested customers. This is, of course, because of lots of attention in the news to the energy crisis.

But this is all happening before the real pocket-book impact has hit people. Once the impact actually starts hitting their pocket books, that level of interest will undoubtedly jump even higher.

Explain the programs SMUD now offers.

There are two basic programs. The first is our PV host program, or what we call PV Pioneer I. In that case, the customer is permitting SMUD to put a utility-owned solar power plant on their roof. They will pay their normal electric bill, plus a small “green fee” of $4 a month to participate.

We have more than 600 PV host system customers, and we’ve been adding approximately 100 each year. It’s a very popular program. For the price of [going to] McDonald’s once a month, they are able to do something that helps to bring sustainable energy to Sacramento.

The other program is the PV Pioneer II program. The customers buy their own PV system [from SMUD] at a very attractive rate. We have the lowest price of PV equipment of anybody in the country. We further “buy down” that price with money from our “public goods” funds.

As a result, the customer can get a PV system that will provide about half of their annual energy needs of a typical home. That’s about 2 kilowatts, for about $4,800. And they also benefit from what is called “net-metering.” Whenever they are generating more than they are consuming, it will literally spin the meter backwards. They sell the power back to the utility and get full retail credit for it. We have about 143 systems under that program. We have also extended the program to the city of Davis.

One benefit I should point out is that this is inflation-proof energy. Whatever it cost to install it in the first place, the cost will never go up. It is independent of fossil fuel prices or natural gas prices. It gives you a hedge against what rates will do in the future. For a typical customer, that $4,800 will provide half of your energy for the next 30 years.

How much solar energy does SMUD produce now, compared to demand?

Our peak demand is 2,700 megawatts. Solar electric is just a small drop in the bucket. We provide about 8 megawatts of our total load. By the end of 2003, we’ll be adding another 7 megawatts to that. That’s both good and bad news. The bad news is that we’re just getting started. The good news is that with a very small amount of photovoltaics being added to our system, we are able to drive the cost of PVs way down.

By the end of this decade PV—without subsidies—will be a cost-effective resource. PV today is actually a lot cheaper than a lot of the market power we’ve had to buy this last year. We do expect to see long-term contracts that will bring that down. But we’re unlikely to ever see the price of power come back down to what it had been previously.

How does the cost per kilowatt-hour compare?

Most of the power SMUD purchases or generates ranges from 3 to 4 cents per kilowatt-hour. The retail cost to our ratepayers is 8 to 12 cents per kilowatt-hour. The spot market price has been as high as 25 to 30 cents an hour.

Right now, PV costs about 14 cents per kilowatt-hour. With the existing contracts that we have in place, the unsubsidized price of solar systems by the end of 2003 will fall in the range of 8 to 10 cents per kilowatt-hour. So PV will be very competitive.

How could we increase the amount of solar power in the mix?

One example would be if we were able, through some combination of carrots and sticks, to get every new subdivision built in the state to use a solar-electric energy roof. That would be the equivalent of building a major 400- to 500-megawatt power plant each and every year.

Here in Sacramento, we have between 7,000 and 8,000 new homes built every year. Those new homes are a major part of the real energy crisis in California. The real problem is not just meeting today’s needs, but how we’re going to meet the increased load in the future. Those new homes, rather than being part of the problem, could easily be part of the solution.

Why did SMUD commit to its solar program the way that it did?

The people of Sacramento want more than just low rates. They also value clean air. They value their children’s future. Our customer-owners want SMUD to do the right thing. They want reliable power, and they want it done as efficiently as possible and in an environmentally friendly way.