‘Feed-in-tariff’ remains question; case of the $200,000 bill
As Sonoma County’s political leaders continue to move forward with the process of setting up a county-wide public power agency, many in the business community are examining what the renewable energy-focused proposal would mean to their operations.
While rates remain a central concern, leaders in wine, manufacturing and retail said that the treatment of renewable energy fed into the grid from solar power and other means could be a significant factor in their decision to become a customer of the agency known as Sonoma Clean Power.
In a region where environmental concerns are widely considered a prudent business practice, those businesses said that an aggressive program to reward producers of renewable energy could help spur further development and promote the proposed agency’s goal of procuring as much power as possible from sources within Sonoma County.
“We often talk internally — what would it look like if we could expand this system and make it profitable?” said Christopher Silva, president of St. Francis Winery, describing the company’s 457-kilowatt photovoltaic system to the Sonoma County Board of Supervisors, which also governs the proposed agency.
“We got into this because it was the right thing to do,” he said. “Not only are we asking you to do the right thing, but something that could be profitable to business.”
It would not be the first such program in California, as the state’s Public Utilities Commission authorized Pacific Gas & Electric Co. and other large utilities to begin buying back power from smaller-scale producers on a limited basis in 2008. The program quickly hit its predetermined cap, expanding several times since and potentially expanding to allow additional and larger-scale participants later this year.
Participants can either enter into an arrangement that measures their net energy usage, potentially reaching “zero,” or a program tailored more for larger-scale producers that would receive a “feed-in tariff” for the excess power fed into the grid, said Brittany McKannay, North Bay spokeswoman for PG&E. Credits and payments are required to be at the retail rate for power at that time of day, she said.
Some Sonoma County companies are already participating, including the aggregate and asphalt supplier BoDean Company. While the company has already been aggressive in its deployment of solar energy projects, the arrangement with PG&E was a key part in the decision to build a 1.165-megawatt-hour solar facility at the company’s Mark West quarry in 2010, said Bill Williams, operations manager.
Yet after speaking to the Board of Supervisors on Tuesday, Mr. Williams said that the impact of the solar project has been a far cry from what the company expected. While the system is designed to cover all or even more than the quarry’s power needs, a lack of sunlight can push the quarry to temporarily convert to drawing power from the grid at a high cost during peak hours.
That cost, attributed to quarry’s large power needs, can add up to hundreds of thousands annually and has worked to overwhelm the financial benefits of the quarry’s renewable energy production, he said.
“Even though it’s possible to have produced more power than we had consumed, we can still look at a $200,000 bill from PG&E at the end of the year,” he said.
Mr. Williams said that PG&E has invested significant effort to help the quarry distribute its demand across several meters, aiming to keep usage below the threshold that commands a much higher energy cost. Yet as the utility is forced to work within the framework of the CPUC program, Mr. Williams said that a local agency may be able to develop programs that are more custom-tailored to power usage patterns for the quarry and other large-scale power users in Sonoma County.
“It makes good business sense to install solar, but only if it works on the tariff side,” he said.
It remains unknown how Sonoma Clean Power might ultimately reward renewable energy production, though planners have said it is a high-priority element of the proposed agency. Marin County’s Marin Clean Energy, an agency that has served as an adviser for Sonoma Clean Power, currently pays one cent more than the retail rate to customers producing more power than they consume, said Greg Brehm, resource coordinator for Marin Clean Energy.
Unlike the similar “net metering” program authorized for PG&E, which bases its benefit on year-end net energy use, the Marin program is based on the cost of power throughout the day. A home with rooftop solar, for example, could produce less than it consumes over the course of a year but realize a net benefit by producing power during the high-demand midday period, Mr. Brehm said.
Most of the agency’s customers with rooftop solar receive a check at the end of the year, Mr. Brehm said. Yet barriers remain to further development, including the fact that even smaller-scale solar projects can sometimes require a conditional use permit and a full-blown environmental review, he said. Efforts are under way in Sonoma County to lower that permitting barrier, including a provision that goes before the Board of Supervisors in May.
Other barriers could also exist in Sonoma County if distributed generation is widely adopted. Cordel Stillman, deputy chief engineer at the Sonoma County Water Agency and a leader in Sonoma Clean Power’s planning process, said that PG&E has cautioned that there could be limits to the amount of power that can flow backwards into the local grid.
Ms. McKannay of PG&E said that the distributed power generation seen from widespread adoption of solar and other technologies is a continuing trend, one that impacts the way PG&E and other utilities actively manage their grids to allow a consistent flow of power to customers throughout the day. Power generally must be used as soon as it is created, and intermittent power sources like rooftop solar have increasingly influenced grid management practices compared to large power plants that have traditionally been the foundation of power delivery.
The utility would continue to manage the grid under Sonoma Clean Power, which would operate under the “community choice aggregation” model like Marin Clean Energy.
Yet as planners continue investigation of potential issues with grid management in the future, Mr. Stillman said that any concern would likely be mitigated by the fact that the majority of those projects are expected to be smaller-scale and distributed widely across the county’s power grid. A handful of utility-scale projects are also under way, including a planned solar array on county-owned land near that Charles M. Schulz-Sonoma County Airport that could power an equivalent of up to 20,000 homes.
“We’ll be able to look at these situations on a case-by-case basis to see if there would be any problems,” he said.
Outreach continues for Sonoma Clean Power, with the hope that municipalities decide by June 30 if they will join the agency’s joint powers authority and allow the agency to serve their residents and businesses. With the exception of the city of Healdsburg, which has procured power and maintained infrastructure through its own utility for half a century, all Sonoma County cities and unincorporated areas have expressed tentative interest.
Business interests have asked to have a continuing seat at the table as those efforts move forward. In a letter signed by executives from E.&J. Gallo Winery, Kunde Family Estate, Francis Coppola Winery, Constellation Brands and 11 other companies in the Sonoma County wine industry, executives expressed conditional support while asking for representation on planned advisory committees for the agency.
While among the largest power users in the county, a large portion of that demand is concentrated during the harvest, according to the letter presented to the Board of Supervisors. Incentives for excess power production could spur the development of renewable energy assets that would significantly mitigate that demand during the harvest while producing excess power for the grid during the remainder of the year.
“It is hard to speculate at this time because there are many more details that need to be flushed out by the county, but suffice to say we and I would hope the entire industry is monitoring issues closely due to the unique power needs of wineries,” said Brian Hemphill, director of operations at Clos du Bois. “Moving forward, I am hopeful that Sonoma County officials will continue to use us as a resource to determine potential impacts on creating and implementing Sonoma Clean Power.”
Planners presented a range of possible rates to the supervisors on Tuesday, synthesizing early bids by wholesale power providers to show that a business consuming 15,000 kilowatt-hours per month could expect to pay 3.1 percent less per month and a half-percent more than conventional utility rates expected in 2014.
The Board of Supervisors on Tuesday authorized the potential roll out of the proposed agency to 100,000 metered customers in the county’s unincorporated areas, though planners noted that there will be several more steps before the agency begins serving customers. That service could come with an initial group of 10,000 customers as early as January of next year.
Copyright © 1988–2013 North Bay Business Journal
View the policy for linking to website content.