California regulators on Friday approved a program that seeks to generate 500 MW of solar power through the deployment of thousands of solar photovoltaic (PV) panels on large commercial rooftops across Southern California. The approval marks the first time a California utility will own a significant renewable energy source.

Southern California Edison (SCE) will own, install, operate, and maintain 250 MW of the solar PV projects. These will consist primarily of about 150 rooftop systems, each generating around 1 MW to 2 MW. The remaining 250 MW will be installed, owned, and operated by independent, non-utility solar providers selected through a competitive process in SCE’s service area.

Before Friday’s decision by the California Public Utilities Commission (CPUC), utility solar programs in the 1-MW to 2-MW range had limited participation in the California Solar Initiative or the state’s ambitious Renewables Portfolio Standard (RPS) program. Regulators said that the energy generated from the project could now be counted toward SCE’s RPS goals, though the output and capacity of the projects would not count toward the California Solar Initiative program goals.

The California Solar Initiative seeks to install 3,000 MW of new customer solar projects by 2016. The state’s current RPS program requires utilities to ensure that 20% of power sold by 2010 is generated from renewable sources. It also requires the state’s three investor-owned utilities—SCE, Pacific Gas & Electric (PG&E), and San Diego Gas & Electric (SDG&E)—to increase their purchases of power from renewable resources by 1% each year.

The decision also marks the “first significant foray” by a utility into ownership of renewable generation, said the CPUC, adding that it would monitor the program’s progress, examine ways in which the program can be improved, and fine-tune the program when and where appropriate.

“This program represents a valuable complement to the existing renewable procurement efforts we have underway, given the significant permitting challenges large scale renewables face, both in terms of transmission and the generating facilities themselves,” said CPUC President Michael R. Peevey in a press release on Friday.

“It represents an important hedging strategy by allowing for the deployment of distributed resources that, while somewhat more expensive than the large scale renewable projects that are the primary focus of the RPS program, offer a much higher level of certainty in terms of when they will come online.”

Unique Projects

Commissioner John Bohn, the decision’s author, said that the projects were unique: They could be built quickly and without the need for expensive new transmission lines. And because they are built on existing structures, they were “benign” from the environmental standpoint, with neither land use, water, nor air emission impacts. “By authorizing both utility-owned and private development of these projects we hope to get the best from both types of ownership structures, promoting competition as well as fostering the rapid development of this nascent market.”

Last fall, SCE inaugurated its first major rooftop system installation on the 600,000-square-foot Fontana, Calif., distribution warehouse roof. The rooftop holds 33,700 advanced thin-film solar panels with a generating capacity of 2.4 MW of direct current power. SCE already has begun construction of its second installation atop a 458,000-square-foot industrial building in Chino, Calif. First Solar of Tempe, Ariz., was the winning bidder to supply panels for these first two installations.

The solar modules can be connected directly and quickly to the nearest neighborhood circuit while major new renewable energy transmission lines are being built, SCE said. “Additionally, the output of solar panels generally matches peak customer demand—lower in the morning and evening, higher in the afternoon,” the utility said in a press release. “Also, the project will allow SCE grid engineers to study the electrical effects of a high penetration of photovoltaic[s] on distribution circuits. The information gained will be shared with the industry.” 

Rushing to Meet the RPS

SCE, like other California utilities, is rushing to pad its generating portfolio with renewable power as California lawmakers develop legislation to increase the current 20%-by-2010 state RPS to 33% by 2020. The CPUC and California Energy Commission have both endorsed the change.

SCE said that 12.6 billion kilowatt-hours in 2008 and 16% of its total energy portfolio came from geothermal, wind, solar, small hydro, and biomass resources. At the end of 2008, PG&E reported that RPS-eligible renewables constituted 12% of its power supply, while SDG&E struggled to expand its 6%. Public utilities fared a bit better: Sacramento Municipal Utility’s District’s power supply was 17% renewable powered at the end of 2008, though as of July 2008, only 8.5% of Los Angeles Department of Water & Power’s supply came from renewables.

As a whole, preliminary information from the California Energy Commission shows that only 13.5% of the state’s total system power in 2008 was produced from renewable sources, up from 11.8% in 2007. About 46.5% of the state’s power last year was natural gas–fired, 15.5% was coal-fired, 14.9% was nuclear, and 9.6% came from hydropower.

In a report released last week that analyzes the cost, risk, and timing of the proposed RPS, the CPUC admitted that “achieving 33% RPS by the year 2020 is highly ambitious, given the magnitude of the infrastructure buildout required.”

Among the CPUC’s key findings were that a 33% RPS would require seven major new transmission lines at a cost of $12 billion, as well as almost a tripling of renewable electricity from 27 TWh to about 75 TWh in 2020. It also warned that capital investments needed to build the necessary generation and infrastructure could be enormous: Reaching the current 20%-by-2010 RPS requires almost $52 billion of capital, while achievement of the 33% RPS case is estimated to require more than twice as much—approximately $115 billion.

Sources: SCE, CPUC, California Energy Commission, PG&E, SDG&E, LADWP, SMUD, POWER