California Gov. Arnold Schwarzenegger’s “Million Solar Roofs” program (the state Senate bill known as SB1), which would give billions of tax dollars to the solar power industry and force home builders to offer solar power as a standard component of all new home construction, died in the state’s assembly September 8. Spiraling cost estimates largely killed the bill.
High Prices Limit Value
Solar power has remained prohibitively expensive throughout the United States. This is the case despite a federal tax credit on solar energy equipment of between 10 and 30 percent, and a $2.60-per-watt-capacity California state subsidy for solar power.
“The current technology for solar is just not even close to cost-competitive,” Severin Borenstein, director of the University of California Energy Institute, told Greenwire on September 20. “The best estimates of the production costs are 30 to 35 cents per kilowatt hour, which is more than three times what it costs to produce [from] conventional fuels and even wind.”
As a result, solar power accounts for less than 1 percent of U.S. power generation. This is true even in Southern California, which receives significantly more sunshine than most other regions of the country.
“The United States has the greatest solar resources of any developed country in the world, and yet solar represents less than one-tenth of 1 percent of all the installed capacity in the United States,” Rhone Resch, executive director of the Solar Energy Industries Association, told Greenwire.
Hefty Costs Doomed Bill
SB1 aimed to place solar power systems on the roofs of half of all new homes built in the state. In a bid to boost the appeal of solar power, the bill contained a patchwork of electricity price hikes, subsidies, and installation mandates designed to boost solar power, despite its prohibitive cost, to a 5 percent share of electric power generation in the state.
Supporters admitted electricity rates would rise as a result of the bill. The San Diego Union-Tribune reported the rate hikes would be a few dollars per year per average customer, based on figures supplied by supporters of the Million Roofs proposal.
The program’s costs sealed its doom in the California assembly. Each rooftop solar power system would have cost approximately $27,000 and would have provided only about half of a home’s power needs. According to the September 20 Greenwire, solar industry officials expect prices to climb in the near future even without the new mandates because of a shortage of silicon necessary for the systems.
Union Wages Were Final Straw
SB1 also became embroiled in partisan bickering over rooftop installation procedures. A Democrat-controlled committee in the assembly insisted workers installing solar power systems on commercial facilities be paid at prevailing union wages. After failing to block the union wage requirement, Schwarzenegger and SB1’s Republican co-author, Sen. John Campbell (R-Irvine), withdrew their support for the legislation, conceding the program would be too expensive.
“Solar is the single most expensive electric technology there is,” said Tom Tanton, senior fellow with the Institute for Energy Research. “Solar is two to three times as expensive as other sources. In a state with already high energy costs, it simply doesn’t make sense to require–with high taxpayer subsidies and mandatory purchases–the addition of more high-cost generation.
“If solar is so great, why don’t people buy solar panels on their own?” Tanton added. “The answer is simple: They cost too much and produce too little.”
Back-Door Implementation Possible
The bill’s death in the state legislature does not necessarily end the proposed program’s prospects. Solar industry advocates already have begun laying the groundwork for reconsideration of the bill in 2006. And Schwarzenegger has pledged to bypass the legislature and submit his proposal, absent the prevailing union wage mandate, to the California Public Utilities Commission (PUC), which can adopt much of the program without the legislature’s approval.
“We can go to the PUC and implement the policy of SB1, and that is where we will be going,” Schwarzenegger aide Richard Costigan told reporters assembled at a news conference, according to the September 9 San Diego Union-Tribune.
“My question is, if you thought you could do this through the PUC, why did you spend two years trying to run legislation?” countered Assemblyman Lloyd Levine (D-Sherman Oaks).
“I’m sure the proposal will come back in some reincarnation, but maybe by then folks will see the proposal for the bad public policy that it is,” Tanton said. “Governor Schwarzenegger, legislative leaders, and the CPUC should let the sun set on this bad policy idea.”
“Until we get control of the cost side of it, it’s just not honest to say that it’s a technology that’s ready to be rolled out,” added Borenstein in the September 20 Greenwire.
James M. Taylor ([email protected]) is managing editor of Environment & Climate News.
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