Southern California Edison sees end to price drops for small solar projects

At its June 23 meeting, the California Public Utilities Commission is due to look at a proposed decision that would approve a Southern California Edison request to terminate a solar procurement program.

The commission is being asked to grant a Petition for Modification (PFM) filed by Southern California Edison (SCE). Through the PFM, SCE seeks authority to terminate the Solar Photovoltaic Program (SPVP), which was originally instituted to procure 500 MW of electric generation capacity supplied by solar photovoltaic (PV) projects to be installed on existing commercial rooftops in the service territory of SCE. SCE was to own, install, operate and maintain:

  • 250 MW of distributed solar PV projects primarily in the 1 MW to 2 MW range, located within its service territory; and
  • seek competitive bids for power purchase agreements with independent power producers.

SCE said it has met its obligations prescribed in the SPVP, and that termination of the SPVP is thus warranted.

In June 2009, the Solar Photovoltaic Program was instituted. The SPVP was established as a five-year program to develop 500 MW of direct current (DC) electricity resources to be procured from solar photovoltaic (PV) facilities. SPVP projects could be located near load, thus avoiding the need to build new transmission facilities and help reduce local congestion. The SPVP procurement target of 500 MW consisted of:

  • 250 MW of utility-owned generation capacity; and
  • 250 MW procured through Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs).

The IPP agreements were to be selected through annual solicitations over a five-year period. The IPP projects were to fill a gap in the 1 MW to 2 MW commercial solar rooftop market segment. The procurement target of 250 MW was initially established, and subsequently reduced to at least 115 MW but not more than 125 MW. The commission again amended the procurement target to constitute at least 125 MW, finding that Southern California Edison had not yet “made enough of an effort to develop [the 1-2 MW] market segment,” after conducting three Request for Offers (RFOs). As modified in 2012 and again in 2013, the SPVP remained at 500 MW but 91 MW were designated for utility ownership, and 125 MW were designated for IPP ownership. The remaining 284 MW were transferred to the Renewable Auction Mechanism (RAM), a procurement mechanism for utility purchases from IPP-owned eligible renewable facilities of up to 20 MW per project.

Under RAM, the three largest investor-owned utilities were required to purchase a specified amount of MW. SCE’s purchase requirement for RAM was increased as a result of the transfer of MW from SPVP to RAM.

After further adjustments, the current allocation of MW in the program is 91 MW of utility-owned generation under the SPVP, 125 MW of IPP-owned generation under SPVP, and 285 MW under the RAM.

Although SCE conducted five RFO solicitations from 2010 through 2015, SCE’s 125 MW procurement target was not met due to a lack of offers received. Accordingly, SCE filed its Petition for Modification on Jan. 15, 2016, seeking commission authority to terminate the SPVP.

Responses to SCE’s PFM were filed by the Office of Ratepayer Advocates (ORA) and by the Solar Energy Industries Association (SEIA).

SCE said it conducted five RFO solicitations from 2010 through 2015 seeking to procure qualifying capacity resources in accordance with SPVP requirements. Based on the results of these solicitations, SCE believes that all feasible SPVP innovations and price reductions have been achieved. SCE believes that additional breakthroughs in SPVP commercial solar rooftop prices appear unlikely in the near term given the results of its fifth SPVP RFO solicitation. SPVP commercial solar rooftop prices declined on average in the second, third, and fourth RFOs.

Despite its efforts, the number of bids at cost competitive prices declined significantly in the fifth RFO, resulting in lack of competition in the solicitation. SCE sought to procure at least 27.58 MW in its fifth solicitation to meet its 125 MW target, but received only 11.5 MW of eligible offers. SCE accepted only two proposals, for a total procurement of 1.8 MW. In doing so, SCE sought to protect customers from unreasonably high costs for SPVP projects. Even if every eligible offer had been accepted, SCE still would not have met its procurement target of 125 MW. The price reduction trend appears to have leveled off. Based on these factors, SCE argues that the SPVP has run its course, and should be terminated.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.