LADWP Lights Up New Solar Program for L.A.
Board of Water & Power Commissioners Approves 100 MW Solar Feed-in Tariff (FiT) Program to Buy Sun Power from Private Parties at Set Pricing
|LOS ANGELES — The Los Angeles Department of Water and Power (LADWP) Board of Water and Power Commissioners today approved the first 100 megawatts (MW) of a 150 MW program designed to increase local solar power in Los Angeles while sparking the city’s economy.
The Solar Feed-in Tariff (FiT) Set Pricing Program will allow customers, solar companies, and other third parties to develop solar or other eligible renewable energy projects within LADWP’s service territory and sell the power to LADWP at a set price for distribution on the city’s power grid. A proposal for an additional 50 MW FiT Program will be discussed with the Board in March, rounding out the full 150 MW FiT program. The 100 MW program will begin as soon as Feb. 1 and continue through the end of 2016.
“Today we took another major step forward in transitioning to a clean energy future for Los Angeles. I’m proud of the LADWP Board of Water and Power Commissioners for moving Los Angeles forward to become the largest city in the nation to offer a feed-in tariff solar program,” said Mayor Antonio Villaraigosa. “The FiT program takes advantage of our abundant sunshine to spur new private sector investment that will create jobs and decrease our city’s reliance on dirty fossil fuels.
“In Los Angeles, we are blessed with sunshine nearly year-round,” said Board President Thomas S. Sayles. “This program aims to stimulate the local economy, reduce harmful greenhouse gas emissions and positions us to meet state mandated renewable energy goals.”
General Manager Ronald O. Nichols said expanding local solar power is an important part of the evolution of LADWP’s power supply from one heavily reliant on coal, to one with more energy efficiency and renewable energy balanced with natural gas. “LADWP is replacing over 70% of its existing energy supply over the next 15 years,” Nichols said. “Local solar not only increases the level of renewable energy we provide to customers but also helps maintain power reliability as we transition away from coal power.”
LADWP will offer the first 20-MW allocation of solar power capacity during the first quarter of 2013. Subsequent 20-MW allocations will be made available every six months through 2016 until the full 100 MW is subscribed. Projects can range in size from 30 kilowatts (kW) to 3 MW, and each allocation will set aside a prescribed amount of capacity for small projects (30 kW to 150 kW).
LADWP will enter into a standard 20-year contract for each project and purchase the solar power at a set price, starting at 17 cents per kilowatt-hour (kWh) for the first 20 MW. The price will decline according to a tiered price structure that caps the amount of power that can be reserved at each price. When each tier reaches its limit of reserve capacity, the price will be reduced by 1 cent per kWh and fall to the next tier.
“We learned from working with the business community, environmental leaders, and solar industry representatives, and based on lessons learned from other FiT programs in California, that we needed to price the program to be successful,” Nichols said. “If we did not buy solar locally through FiT, we would need to purchase other renewable energy from outside the city and bring it into Los Angeles to reach 25% renewables by 2016 and 33% by 2020,” Nichols said. LADWP opted to set the initial price higher than what it would pay for other renewables to ensure the program has a sufficient incentive to become solid and sustainable.
The 100 MW program builds upon a FiT Demonstration Program that LADWP began last spring to gain price discovery, test the program structure, and fine-tune the processes and guidelines. “We started small, testing the market, and making sure we have the best, most cost-effective system for the future,” said Aram Benyamin, LADWP Senior Assistant General Manager – Power.