California Solar Initiative: overhyped and underperforming

Now that the $2.167 billion California Solar Initiative is winding down, electricity ratepayers might ask: What was it and what did it accomplish? Was it:

1.) A cutting edge solar energy project to bring about a “self-sustaining” solar power industry, as touted by the California Public Utilities Commission (CPUC) and state legislators?

The answer is mostly no based on post-project evaluations done by academic experts.

2.) A program to replace very expensive conventional peak time power plants with equally expensive but clean rooftop solar electricity that is generated at the time of day when it is hottest?

The answer is no. Contending that rooftop solar power replaces conventional peak time power is bogus. This is because electricity rates are tiered depending on usage and climate zone and the fact that ultra peak power rates during heat waves and cold snaps only last maybe as much as four weeks out of 52 weeks in a year.

3.) An expensive, artificial green energy and jobs program that is now being wound down, as there is a recovery in the jobs market?

The answer is yes. Since California’s Solar Initiative did not produce a self-sustaining rooftop solar power market (Question No. 1) and cannot be justified as a replacement for expensive peak time electricity, this leaves us with one conclusion: It was mainly a jobs stimulus program that ended up adding about a $200 tax to 10.8 million utility customers’ electric bills.

Public Utilities Commission fudges the numbers

cpuc-public-utilitiesHere’s the background for these conclusions:

In 2001, the CPUC came out with a report, “California Solar Initiative Cost-Effectiveness Evaluation.” The report said that the CSI was a success because it reduced the subsidy for installing solar panels on a house from $2.50 to $0.20 per kilowatt installed. Success was measured by how losses were reduced, not by the actual market price of solar power without subsidies.

The CPUC website fails to clarify that cost of $6.16 per kilowatt is the cost installed, not the regulated price that consumers pay for electricity. What is called “net or reverse metering” — selling excess solar power back into the electricity grid — means that most customers have low electricity bills.

Dr. Severin Borenstein of the UC Berkeley Energy Institute reports that a rooftop solar power lifetime installation costs $86,000 to $91,000, but the value of the power produced over its lifetime is only $19,000 to $51,000.

What Californians actually pay for electricity rates is highly manipulated by what tier of energy use a customer falls into. Rates range from $0.13 to $0.34 per kilowatt-hour depending on usage and what climate zone a customer lives in. The California Public Utilities Commission failed to report what the retail price of rooftop solar power was both with and without subsidies. Presumably, if the retail price was lower than conventional “dirty” power sources the CPUC would have reported that, but it didn’t.

But has weaning electricity customers off large solar power subsidies worked? Did the Solar Initiative create a growing market for solar energy?

Millions of utility customers subsidize solar installations

Of course, the CPUC omitted disclosing that the $6.16 per kilowatt cost of installing rooftop solar power came by adding $2.167 billion to the electricity bills of other California electricity ratepayers. To provide subsidies to the 118,303 recipients of residential, commercial and governmental rooftop solar power installations the electricity bills had to be raised for 10.8 million customers of Southern California Edison, Pacific Gas and Electric (PG&E) and San Diego Gas and Electric (SDG&E) through its subsidiary the California Center for Sustainable Energy (CCSE).

In other words, the Solar Initiative mandated on average about 91 other electricity customers to subsidize the rooftop solar installations of each rooftop solar power installation. Spread over 10.8 million customers, that equates to about a $200 tax per California electricity customer. The California Solar Initiative is another socialized system like Social Security that is based on a larger base of utility ratepayers paying for a smaller number of recipients. It is a program based on privatizing profits and socializing losses.

Thus, the $6.16 per kilowatt cost installed and 43,000 solar-energy-related jobs created by the California Solar Initiative are artificial and not market-based. The program could never have become self-sustaining in the first place.

What has the Solar Initiative accomplished?

world_borensteinIn his report “The California Solar Initiative is Ending, What Did It Leave Behind?” Borenstein (right) offers several conclusions:

“So, as the CSI fades away, is residential solar PV (photovoltaic) on stable footing going forward? Probably not. The tax credits are under constant pressure in Washington. The very-steep increasing-block rates seem unlikely to continue, primarily because the tiers don’t reflect real cost differences of supplying power. The power purchase agreements don’t lower the basic costs of residential solar, though they do reduce the customer’s risk from poor PV system performance or a utility rate spike.”

Borenstein says the only benefit gained from California’s Solar Initiative is that the cost of manufacturing solar panels has dropped substantially. But how long will that last without a constant flow of subsidies to retain trained installation crews?

Did the Solar Initiative grow the rooftop solar power market? Borenstein’s answer:

“Unlikely. The entire capacity installed under the CSI is less than 2% of the worldwide PV panel installations since 2007.”

In a previous paper written in 2008, Borenstein also studied whether rooftop solar installations were clustered in areas that would have reduced transmission congestion and the need for investments in new transmission infrastructure?  Borenstein found that rooftop solar was not clustered in the most valuable locations.

The rooftop solar installations completed under the Solar Initiative were not prioritized by geography to reduce grid congestion or eliminate the need for existing transmission lines. Solar-powered houses still need redundant conventional power hookups because sometimes solar panels are in the shade due to cloud cover, windstorms or smog.

But doesn’t rooftop solar replace pricey peak power?

But does rooftop solar power replace expensive and polluting conventional peak power plants (coal, natural gas, oil)? Does it replace expensive but non-polluting industrial solar farms that blight California’s natural deserts?

Peak power is high-priced power resulting from spikes in demand for electricity due to a heat wave, cold snap, power outage from a blackout due to system failure, or from regulations that create a “pricing fever” such as occurred during the California energy crisis of 2001.

Peak power can be contrasted with “base load power,” which is the power needed to meet the energy demands on typical days.

The average price of peak power in California on July 4, 2013 according to “Energy News Data” website ranged from about $7.10 to $49.70 per megawatt hour (or $0.07 to $0.49 per kilowatt hour). The average retail price for non-peak electricity in California is $0.15 per kilowatt-hour as of April 2013. Some of California’s peak power is imported from the Columbia River, the Klamath River, and coal power plants in Arizona, Nevada and Utah.

GreenSchemesCover_newPeak prices can spike to $250 per megawatt hour (or about $25 per kilowatt hour) during the hot July and August months in California. So heavily subsidized rooftop solar power may look like a real deal. But such peak prices typically only last for one to two weeks or so during the year.

And when the sun doesn’t shine or rain or dust storms reduce solar power output, redundant gas-fired power plants have to be available at an instant to back-up roof top solar power. Back up power — also called “spinning reserves” — doesn’t come cheap because it has to be on stand-by 24/7/365 but can recover its costs only over a very short period of high demand. And back-up power availability means that California rooftop solar power is not actually reducing air pollution. California solar power is merely exporting its pollution by stealth to nearby states just as it does with conventional power.

The dirty secret of all green power is that it does not eliminate backup power plants having to stay on standby and emitting air pollution in the process. So rooftop solar power does not appear to be justifiable or self-sustainable on the basis that it is a cheaper or cleaner source of peak-time power.

Solar advocates have new scheme for post-subsidy sales

Now that subsidies for rooftop solar power are being phased out, the solar energy industry is trying to push subprime energy home loans on unsuspecting homeowners. Has California learned nothing from its catastrophe with subprime residential housing loans?

The solar industry asserts that the bulk of California rooftop solar panels were installed in middle-class ZIP codes and were not just for wealthy homeowners. But the top 20 ZIP codes for residential rooftop solar installations subsidized by the Solar Initiative all were in wealthy ZIP codes and represented 10.3 percent of all the 118,303 installations under the program (see table below). Of a total of 2,591 ZIP codes in California, 20 wealthy ZIP codes ended up with a disproportionately high proportion of rooftop solar installations (data excerpted from interactive website of California Solar Initiative by author). This phenomenon of green-energy subsidies helping the wealthy should be familiar to CalWatchdog readers.

This is why the Little Hoover Commission is calling for a “time out” for all green power in California. The California Solar Initiative was an expensive, artificial jobs and clean-energy program that needs to be seen for what it really was. The California Solar Initiative should be left in the shade where it belongs.

Zip Code
(@1,000 houses)
No. of Installations
Project Cost
Median Household Income
Percent over $100,000 per year
5.5 mW
5,500 houses
4.6 mW
4,600 houses
4.4 mW
4,400 houses
Rancho Mirage
4.4 mW
4,400 houses
4.3 mW
4,300 houses
4.1 mW
4,100 houses
4.0 mW
4,000 houses
3.7 mW
3,700 houses
El Dorado Hills
3.6 mW
3,600 houses
3.3 mW
3,300 houses
3.2 mW
3,200 houses
San Jose
3.2 mW
3,200 houses
3.1 mW
3,100 houses
3.0 mW
3,000 houses
2.9 mW
2,900 houses
2.8 mW
2,800 houses
95070 Saratoga
2.7 mW
2,700 houses
2.7 mW
2,700 houses
2.7 mW
2,700 houses
2.7 mW
2,700 houses
Data Source: California Solar Initiative – Statistics.  Data analysis by author.


Write a comment
  1. John Galt
    John Galt 10 July, 2013, 09:31


    Penetrating article on the state’s solar program and ongoing electric tariff fraud. There appears to be a typo in this line:
    “…Peak prices can spike to $250 per megawatt hour (or about $25 per kilowatt hour) during the hot July and August months in California. ..”

    Reply this comment
  2. Maquila Solar Is the Wave of the Future
    Maquila Solar Is the Wave of the Future 10 July, 2013, 18:18

    I don’t think cost was ever a consideration here. The purpose of the program was to Save The Planet.

    Is this program going to reach its goal of 3 gigawatts of electricity generation by 2016?

    Reply this comment
  3. ECK
    ECK 14 July, 2013, 19:25

    When are the bulk of our citizens going to wake up and realize what BS this solar s**t is? Never I guess, since the media has bought into this “alternative energy” hoax. Anyone with half a brain can see that these “green” ideas could supply us with anywhere near the energy we need.

    Reply this comment
  4. nubwaxer
    nubwaxer 15 July, 2013, 16:08

    i’m sorry you are a carbon advocate rather than accepting the inevitable and trying to provide solution for power production rather than sitting in a tree throwing $h!t.

    Reply this comment
  5. Alpena3D
    Alpena3D 23 July, 2013, 17:12

    Are we sure that C02 is the culprit, not the sun and its effects on low level cloudiness cover?

    Reply this comment
  6. doug
    doug 23 July, 2013, 20:10

    if i could get solar power from the sun and install the grid system myself and not get sued by the utility for “stealing” from them, i’d do it. its over regulated and a scam. Edison will not let you cut your bill in half and have your new system paid off within 3 years. think about it, that is lost revenue.

    Reply this comment
  7. Bill - San Jose
    Bill - San Jose 23 July, 2013, 23:26

    Met an engineer at a local solar company. I gave him props for the technology and what they were doing.

    He stated: “Well, we can build solar panel plants and build solar products for 20 years …. but it will only be 5% of what the world needs. We still need hydro-electric, nuclear and petroleum.”

    You can’t get it anymore clear than that folks. Gospel truth.

    Reply this comment
  8. Ted Steele, The Decider
    Ted Steele, The Decider 24 July, 2013, 13:59

    …although Borenstein has said that just like the diesel tax got us off steam power and the auto gas tax got us off horse and buggies, this in time will work…….Galt indeed!

    Reply this comment
  9. Leo
    Leo 10 November, 2013, 17:05

    There are many variables that are involved with the installation of residential of Solar PV panels. Most of California is at a good latitude and have relatively low cloud cover for most months. It requires a simple paper and pencil or internet application study to yield the results at any particular residence address. So lets say you own a residence in an area where you could install solar PV panels? This is no longer a technical problem and not a cost problem but a bureaucratic one. In my case I was a bubble sitter and watched on the sidelines as the NINJA home owners lost “their” houses. I bought at the bottom of our local market 18 months ago and am no longer a renter. Why mention this? Because I have been studying the activities of the house salesmen and realize that it is extremely difficult to find one who only lies 50% of the time instead of 100% of the time. It took 3 years to find a sometimes honest agent and almost correct price.

    The monthly electric bill on this house was $425-550/ month and the propane gas was about an additional $100/month. Today our highest month was for electric was $94 and we are running about $6/month on natural gas. I AM NOT A tree hugger or greenie but do want to minimize long term payments for an expendable “non-asset” like utility bills.

    My approach was in three areas:

    1) DIY dual pane windows, DIY thermal window coverings, DIY energy management (open the North facing windows and shades and close the South facing windows and shades in the summer). I got rid of all the incandescent and CFL lamps and replaced them with LED lamps. My costs were NOMINAL because I did the work. The materials cost was low. NO “government rebates” requested or used.

    2) Install a natural gas line between the street and the house. This was the most expensive even though I did most of the labor (dig a ditch for the gas line). The costs for the County PERMITS and a short piece of gas line (under the street) cost me over $6,000 from the utility company. I watched the utility workers and 2 of them worked 3 1/2 on day one and 2 more worked 3 hours to close up the job on the next day. That’s $6,000 for 6.5 hours of work = $923/hr for the workers or $462.50 per hour for labor. I don’t think the workers were getting paid that much! This installation replaced propane with natural gas is now costing the utility company over $300/month they would have received from me in higher utility bills. It is also costing the propane company about $100/mo in use and tank rent fees.
    I did 90% of the work myself (all you need is a shovel and some muscle –cheaper than a gym membership). I later learned it was the high cost of utility bills that broke the family budget of the former owners forcing them to lose the house.

    3) Solar PV panels. I have not yet installed the solar panels but it is not cost that stalls my project, it is the ignorant way that California and the utility determine my power needs! I DO NOT want any rebates—they are bogus and greatly increase the cost of my project. Why? The utility company uses state law to determine “what I can spend” and how many panels I can afford for my residence! What the hey! I am paying cash for this and KNOW WHAT I WANT and what am willing to pay. No contracts and double talk that will ONLY increase my costs. The utility company claims that THEY MUST do an energy audit first AT MY COST. What about the THOUSANDS of hard dollar savings I have already done by not paying for overpriced utilities? So far my monthly savings are noticeable and my economic analysis show that I am only a few months away from amortizing my materials and installation costs. But the utility with the help of California regulations wants to “help me” to determine my needs! I KNOW EXACTLY what I can afford and what I “need” so let ME make the decision, it’s MY MONEY. Currently each California electric utility has an artificially low allowable monthly kilowatt generation rate. This rate is based on calculations that look at a contractor installed solar PV system at retail list materials and labor costs. My DIY projected materials and labor costs are about 15-20% of their projected costs. This is one of the unstated factors on the so-called California electric rebate scam. I know what I want and what I want to pay. Leave me alone and get out of my business.

    I have not included local permit costs which are based on what the county thinks my costs are (astronomically higher than my real costs, even with high quality components).

    What we need is the utility to pay us for the energy we generate and pay us the rates that THEY pay energy suppliers! What’s wrong with that?

    I know, the utility company will start losing EXCESS profit that they made on the prior inefficient consumer use of energy—the same one they want to prevent you from making.

    Think about it- it is not rocket science. If the utility “helps” you lower your costs it will have a direct effect on their net profits. I am not asking them to do anything, but stay out of my business. The utilities AND CALIFORNIA STATE are conspiring to keep costs high and out of reach of the typical consumer. This is opposite their “feel good”, “tree hugging”, “helpful” regulations.

    A Solar PV panel installation using a little thought can be a no brainer installation for most Californians. It is NOWHERE as expensive as you are being told by the industry or by California government. The words “electricity” and “utilities” scares most residential customers but there is NEW TECHNOLOGY (Not Solyndra) that is available to everyone who really wants to save money on electricity bills on a grid tied system.

    A few recommendations based on the solar insolation for your property:

    1) Don’t be overly concerned with panel efficiency. Look for high quality panels with excellent warranties that can be purchased in bulk. Most PV panels are sold in pallet sizes. My stage I plan uses 24 PV panels, but they are not “high efficiency” and cost much much lower per unit.

    2) Try to use “micro-inverters” for each panel or every two panels. They seem costly but are extremely helpful in allowing you to get the most for your money, best operation and EASE of installation. Just plug them into your AC string like plugging in a reading lamp! EASY “install”. Can you plug a lamp into the wall? You do not need a “solar” engineer. The output of each panel is at 110 VAC. Keep maximum of 12 panels per string and you won’t have any issues.

    3) Use any search engine and type in “solar” and “wholesale” and you will quickly find vendors who will help you at no cost. Its easier than buying a car. Keep away from the “talkers”,”yakkers” and smiling faces and you will be fine. Don’t finance anything. Cash works best.

    Reply this comment

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