While leaders in Washington DC and state capitols fight polarized budget battles, renewable energy has continued to draw support from many points on the political spectrum, allowing leading states to continue to expand markets for renewable energy capturing economic and environmental benefits.
Three weeks ago, California governor Jerry Brown described his state’s plans to deploy 20 GW of new renewable energy capacity in accordance with his Clean Energy Clean Jobs Plan. The recently announced energy targets are a substantial increase from current levels and depend highly on distributed solar power.
60 percent (12 GW) of the 20 GW target is intended to come from “localized generation,” or distributed projects less than 20 MW in size. Such projects offer a number of benefits like streamlined grid integration and reduced siting challenges.
As described in a recent conference paper, the 12 GW target is made up of three main components:
- Behind the meter: 5.2 GW of rooftop solar developed on customer roofs and used to offset retail power purchases.
- Wholesale generation: 3.4 GW of distributed generation fed into the utility system through feed-in-tariffs or other utility procurement approaches.
- Distribution Grid Interconnection Capacity: An additional 3.4 GW of capacity that can be deployed without major upgrades to the distribution system.
These targets take into account current market trends and established policy mechanisms, including California’s 33 percent Renewable Portfolio Standard. And, while they are aggressive compared to the current size of the solar market (California installed just 0.25 GW in 2010), the goals are modest compared with the German market (Germany installed 7.4 GW in 2010 alone, 85 percent of it on rooftops).
Studies of U.S. rooftop potential also indicate a large addressable market compared to California’s targets. A 2008 Navigant Consulting analysis published by NREL estimated 81 GW of rooftop potential in California, in addition to further potential from distributed ground-mounted systems.
California’s targets are well aligned with RMI’s Reinventing Fire research, which analyzed the wrenching changes faced by the electric utility industry. RMI has similarly determined that a massive scale-up of distributed generators—particularly solar PV—is essential to provide resilient, scalable, cost-effective power as existing central thermal plants are retired.
While policy leadership in states like California has laid a foundation, it is up to the market to deliver the planned solar capacity. In order for businesses to meet the statewide targets and deliver the job creation and renewable energy production goals, immense scaling and coordination challenges must be overcome.
All successful solar projects must coordinate three elements: financing, real estate, and a power customer (either an end-user or an electric utility). Each of these forces is much larger than the solar developer—they are large, entrenched industries that must all buy in to a new solar project. Misalignment on any of several highly nuanced details such as system performance estimates, power purchase agreement terms, REC ownership, or insurance coverage can easily kill a solar project. RMI is partnering with DOE and solar industry experts to create scalable solutions to these systemic challenges.
Bringing solar to scale is only partially dependent on solar manufacturers and developers; the wider ecosystem of real estate owners, institutional investors, and utility system operators is critical. Their involvement and leadership is essential to meeting California’s goal.