Solar Woes Shock Sacramento

Published November 1, 2002

On September 6, the Sacramento Bee revealed that the showpiece of the city’s municipal electric utility, an internationally known solar power program, is in shambles. It has fallen short of its goals, rocketed past its budget limits, lost its long-term chief, and left Sacramento Municipal Utility District (SMUD) directors scrambling to figure out how to salvage their commitment to renewable energy.

The disarray could have far-reaching implications. Other solar proposals could face a harsher climate if SMUD is faltering and stumbling in a major way. “Everyone with a real knowledge of the industry knows that SMUD’s program is smoke and mirrors” and has promised solar systems at unrealistic prices, said Tim Townsend, a solar subcontractor who studied panel quality at a now-defunct research center in Davis.

Utility directors and managers say they remain committed to keeping some kind of solar program. But as internal audits showing the extent of the damage are completed, they are not sure just what will be left.

Already, SMUD has pulled the plug on any new installations of solar panels at commercial sites for the rest of 2002. It still will accept residential requests this year for the panels, which convert the sun’s heat to electricity. But for 2003, nothing is certain—neither the price of solar systems nor the pace of their installation.

“It’s a really miserable situation,” said Genevieve Shiroma, SMUD board president. “I’m really shocked to hear that the program is basically in arrears.”

SMUD had planned to spend $3.2 million in 2002 to help homeowners, businesses, government offices, and nonprofit groups install photovoltaic panels on their rooftops or grounds. Instead, on September 5 the board authorized spending more than twice that—at least $7.6 million. It has been warned the total may need to be upped to $9.5 million if SMUD cannot persuade the state to switch its stance on a solar subsidy.

Among the problems outlined for the board:

  • The benefits of the solar program were double-counted in budgeting, making the program appear $1.9 million cheaper than it actually is.
  • Solar panels cost far more than projected, partly because of delays and financial problems of a manufacturer that would have been SMUD’s cheapest supplier. Higher prices from other manufacturers, sometimes up to 90 percent over budget, combined with delayed purchases, drove 2002 materials’ costs $2.4 million over projections.
  • Solar installations outside SMUD’s area were mistakenly priced below cost, in essence making SMUD customers subsidize people in Davis and elsewhere.
  • Contracts with suppliers were changed in violation of board policy and without board approval.
  • The district counted on qualifying for various grants and subsidies that it didn’t ultimately qualify for, and that sometimes existed only as ideas outlined in pending legislation.

The controversy leaves SMUD in the uncomfortable position of having to reassess what would have been a key piece of its landmark goal to get up to 20 percent of its power from non-hydroelectric sources of renewable energy by 2011. It had been considering increasing its current 10 megawatts of solar power by as much as 30 to 40 megawatts over the next nine years. But that goal counted on far lower costs than SMUD now faces.

Today, with SMUD’s $1 billion annual budget and the public’s interest in solar power, several board members said they are willing to support a continued solar program even if it costs more.

S. Fred Singer, professor emeritus of environmental sciences at the University of Virginia and president of the Science and Environmental Policy Project, shares his thoughts on environment and climate news stories in “The Week that Was,” a regular column available on the Web at