DRG and the California Solar Initiative: Your Path to Energy Savings
More and more homeowners and owners of multifamily and commercial buildings are turning to solar projects to help meet their energy needs. This reduces their energy costs and the overall carbon footprint in their area. These localized solar-PV resources and other renewable-energy sources are gradually transforming the national energy grid, while pushing the market toward developing these localized systems.
Distributable renewable generation (DRG) consists of on-site, localized, small-scale renewable-energy sources. The benefits of DRG include
- reduced peak power loads, which reduce grid stress;
- reduced transmission and distribution expenditures, due to on-site collection and consumption; and
- improved grid reliability, due to reduced grid stress.
Although wind is a viable alternative to carbon-heavy sources of energy such as coal and natural gas, current and future markets seem to be favoring solar development. This is probably because wind power development has been sporadic and specific, depending as it does on the availability of the wind and suitable locations. Solar development, in contrast, has greater access in more areas to suitable locations; and the sun is more dependable than the wind.
Model Program Rules
Although developing a new energy system can be daunting, state initiatives and best-practice outlines can make it easier to integrate DRG into the energy mix. The Interstate Renewable Energy Council (IREC) Community Renewables program seeks to protect existing solar projects—especially residential or community-oriented projects—while providing a framework for future investors, operators, and customers to have access to renewable energy. Last year, IREC released its Model Program Rules for Community Renewables, which provide guidelines for people interested in community renewable energy projects. These guidelines help to facilitate coinvestment in local renewable-power facilities. They include information and guidance on
- methods for allocating the benefits of participation;
- the valuation of energy produced by community renewable-energy systems;
- utility compensation for program administration;
- financing options for community renewables; and
- program administration.
If you are thinking about investing in a new solar system for your home or your community, these guidelines can get you started.
If you live in California, the California Solar Initiative (CSI) provides incentives for local customers to develop their own solar projects. CSI includes a rebate program and funds solar projects on existing homes and on new or existing commercial, agricultural, government, or nonprofit buildings. The Initiative is geared toward flexibility and market compatibility, making it easier for any homeowner or developer to take advantage of its rebate programs. For example, CSI currently covers 13% of the building costs of any solar project, and incentives are paid out either up front or on a monthly basis over a period of five years. In the first case, the method of payment is an expected performance-based buydown (EPBB). In the second case, it is a performance-based initiative (PBI). In either case, CSI rewards homeowners who maximize the output of their solar units by addressing tilt, installation angle, location, and system capacity.
The flexibility of the CSI program, coupled with increased access to solar panels and decreased cost, helps to push market forces toward even cheaper PV cells, making solar development even easier in the future.
CSI also includes the multifamily affordable solar homes and single-family affordable solar homes (MASH and SASH) tax incentives. There are two options under the MASH incentive structure. Track 1 provides capacity-based incentives for solar PV systems that offset common area and/or tenant loads. Track 2 offers higher incentives to applicants who share cost savings from solar with their tenants. Track 2 incentives are awarded through a competitive process.
A beautiful aspect of the MASH incentive is that it includes the use of virtual net metering (VNM). This is a tariff scheme that allows the excess energy produced by one customer’s solar system to feed directly back into the grid for redistribution. The use of VNM could be a precursor to developing a broader power network, fueled by residential units and designed to meet community energy needs. A broad network would make possible the maximum use of space and solar equipment.
The use of VNM creates a system where each tenant no longer requires an individual meter. The VNM allows property owners to distribute solar net energy metering (NEM) generation credits to multiple tenants from a single PV system. Furthermore, once the solar NEM credits are determined for the single PV system, those credits are distributed to each tenant’s bill at a predetermined allocation. This system allows consumers to draw energy from the grid during times of scarcity by drawing upon credits accumulated during times of excess production.
The key difference between VNM and NEM is that with VNM, the property owner can run multiple meters off of one PV system, whereas with NEM, the property owner must have a PV system behind each meter. Therefore, VNM inevitably increases efficiency for the property owner. This is particularly useful for affordable-housing units, but VNM may also be viable in a community of homes whose owners wish to group together to save energy.
To download a copy of IREC’s Model Program Rules for Community Renewables, go to http://irecusa.org/irec-programs publications-reports.
To learn more about the work of the CCSE, go to http://energycenter.org.
For information about choosing solar over wind generation, see http://energizevermont.org/2011/03/rutland-herald-solar-better-choice-than-wind.
According to the California Center for Sustainable Energy (CCSE), “the economic performance of PV retrofit projects on affordable housing improves significantly if tax benefits are utilized.” This statement confirms the importance of the MASH program.
Although the CSI was slow to increase the installation of multifamily PV systems, the program has begun to pick up speed. The CCSE specifically reports that because under the MASH incentive, affordable housing owners have saved money, “we have seen a proliferation of MASH projects, particularly among tax-exempt property owners,” who stand to save nearly $0.15/kWh. And the CCSE adds that in these projects, “third-party financing structures are used, such as power purchase agreements and solar leases, that enable the utilization of tax benefits.”A reallocation of public funds away from traditional heavy energy sources toward solar-incentive programs is one possible source of tax rebates and third-party funding. As of April of this year, through the CSI MASH program 3.8 MW of solar capacity was interconnected on 67 multifamily affordable housing buildings serving 4,213 tenant units.
The IREC rules, combined with rebates available under the CSI MASH program, make it easy for DRG hopefuls to start their own solar projects. These programs also make affordable energy viable for community-based groups, affordable-housing projects, and many others.
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