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California Governor signs 2 important Solar Bills

In October, Governor Arnold Schwarzenegger approved and signed two of the most important solar bills, AB 920 and SB 32. The underlying idea behind the bills was to motivate Californians to make an aggressive investment in solar energy power generation. Through the signing of the two solar bills, California is one step closer to the Governor’s dream of a “million solar roofs” by 2016.

Under the bill AB 920, the utility companies are required to make a payment for the surplus energy generated and sent to the grid by the customers. These companies are to evaluate the surplus electricity produced by the customers at the end of every year and make a check for their contribution. Previously, the matter related to the surplus energy was brought under the jurisdiction of the state’s net metering law. Under the law, the surplus received from the customers was not entitled to any compensation. The companies made use of the surplus solar energy that the customers’ solar panels produced above their needs for free.  This was the underlying reason for the introduction of the bill AB 920 that was authored by the Assembly member Jared Huffman (D-Martin).

The bill has the task of setting the rates at which the surplus solar electricity producers are to be compensated by the California Public Utilities Commission or the CPUC. The excess electricity that gets credited at the end of every month will be added for the final settlement at the end of the year.

The second bill that got its approval was SB 32 that was authored by Gloria Negrete McLeod (D-Chino). It establishes a new feed-in tariff program applicable for the state of California that creates a twenty year contract between the solar installer and the utility company to buy the solar electricity at the set prices. This program is similar to those that made Germany and Spain the largest solar markets today.

The acceptance of the bill received a warm welcome from the stock market. The news of the bill brought a stock gain to the major players like the San Jose-based Sun Power, the state’s biggest supplier; Hebei, China-based Yingli; Tempe, Ariz.-based First Solar Inc., the world’s largest maker of thin-film solar modules; and China’s Suntech Power Holdings Co.

Even though the environmental groups consider the move as an effective way for the state’s goal of generating 33% of power from renewable resources, the market is maintaining a vigil over the tariff plan that is to be introduced by the CPUC. “It’s an incremental positive for the state’s major suppliers,” says John Hardy, an analyst at Broadpoint Amtech in Greenwich, Conn. “What we don’t know yet is whether the tariffs will be set high enough to stimulate demand,” he said.

The bills were followed by the vetoing of the move to lift the cap on net metering from 2.5% to 5% that permits the utilities to collect a third of their electric power from the renewable energy sources.

To quote Governor Schwarzenegger, “Local economies will benefit from the creation of thousands of new jobs while we continue to lay the groundwork for California to meet our renewable energy and environmental goals.”

1 Comment »

  1. I like the way you detailed the information. Very Useful

    Comment by Stephanie — 05/30/2010 @ 4:27 am

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