With a focus on the San Diego region’s job growth, smarter technology development, solar energy storage integration and increased electric vehicle infrastructure and deployment, Smart City San Diego is delivering results. The collaborative is made up of City of San Diego, GE, UC San Diego, CleanTECH San Diego and San Diego Gas & Electric (SDG&E).  It formed to leverage each entity’s strengths to create and implement initiatives to improve the region’s energy independence, reduce greenhouse gas emissions and assert San Diego as a clean energy leader.

“Over the past year, Smart City San Diego has been forward-thinking about creating opportunities for a more sustainable region,” said San Diego Mayor Sanders. “Moving into 2012, our collaborative will continue to build on those results and develop and launch even more initiatives to drive economic growth for our region.”

These results include:

Car2Go: The City of San Diego and SDG&E worked with Daimler’s Car2Go to make San Diego’s launch of its plug-in electric vehicle car sharing pilot a big success. The City continues to work with SDG&E to increase the number of public-access charging stations throughout the Car2Go targeted region. The team is working collectively to educate the community about the benefits of the pilot program and expects to increase public interest in electric vehicles and encourage the growth of the plug-in electric vehicle industry in San Diego. Data gained from Car2Go will provide information on where charging stations are most needed. Smart City San Diego also continues to work to streamline the permitting process for deploying charging stations.

Smart Appliances: SDG&E and GE are working together to test the communication links between GE’s smart appliances and SDG&E’s smart meters to ensure consumers are empowered with the best technologies to manage energy use and costs. GE’s Appliances business is supplying SDG&E with a smart dishwasher, washer and dryer along with a GE Nucleus energy manager and Programmable Control Thermostat to expedite the testing process. SDG&E’s team is currently testing the communication between these assets prior to consumer deployment.

Economic Development and Job Growth: CleanTECH San Diego – working with the City of San Diego, SDG&E, UC San Diego, Scripps Institution of Oceanography and its private sector member companies – is quantifying and categorizing regional clean tech companies that touch smart grid technology development. Categories include solar energy, energy storage, energy efficiency, clean transportation and other technology companies. CleanTECH San Diego has also created a baseline analysis of the direct and indirect economic impacts of the named clusters. This baseline analysis can help quantify year-over-year job growth and other economic impacts of the regional smart grid sector. This will be particularly helpful in measuring the economic impact of the over 180 solar companies and over 20 storage companies that call San Diego home.

Solar Integrated Energy Storage: UC San Diego and SDG&E have submitted a grant application to test, demonstrate and evaluate a variety of solar integrated energy storage projects over a 12 to 24 month period. If funded, this initiative will test multiple applications at multiple sites and provide analysis for the benefit of utilities, grid planners, regulators, solar inverter manufacturers, system integrators, business modelers, energy storage manufacturers and other early adopters. CleanTECH San Diego supports this initiative as part of efforts to advance the region as an Innovation Hub (IHub).  In August 2010, the California Governor’s Office of Economic Development designated the greater San Diego region as an IHub for solar energy storage.  The purpose of the IHub is to build on the region’s existing innovation infrastructure and strong culture of collaboration to accelerate the convergence of solar energy and energy storage.

Policy Leadership: In July 2010, Smart City San Diego hosted California Public Utilities Commissioner Mark Ferron for a day long briefing on San Diego’s smart grid initiatives.  The Commissioner met with industry representatives from the solar, energy efficiency, smart grid and technology sectors and toured UC San Diego’s world renowned microgrid.  The collaborative held a roundtable with the Commissioner to brief him on the vision and work of Smart City San Diego.

Solar Decathlon 2013 Finalist: The City of San Diego and UC San Diego worked with the Department of Energy’s Solar Decathlon Committee to make San Diego one of two finalists for the location of the 2013 Solar Decathlon. The event promotes the outreach, education, and economic benefits of energy security, renewable energy and energy efficiency.  If early projections bear out, attendance at the event has the potential to be larger than the San Diego Convention Center’s highest attended conference and create a positive economic impact for the region.

Economic Development and Job Growth: GE worked with CleanTech San Diego and SDG&E to host a GE Sourcing Supplier Diversity event for the first time in San Diego.  Over 50 diverse local suppliers participated in one-on-one sessions with GE buyers to learn how best to work with GE and be considered for future projects.

“GE is proud to bring our grid modernization technology and expertise to Smart City San Diego,” said Mark Hura, global smart grid commercial Leader for GE’s Digital Energy business.  ”An efficient, reliable and sustainable electric infrastructure is essential to powering economic growth and supporting business, industry and the dynamic lifestyles of a skilled workforce.  We applaud all the successes over the past year and look forward to many more to come.”

Formed in January 2011, Smart City San Diego was charged with bringing together leading organizations from government, business, education and non-profit to maximize synergies to drive sustainability programs forward, identify new opportunities, embrace additional collaborators, and move the San Diego region beyond today’s boundaries of sustainability.  This model will be able to be duplicated in other regions.

The collaborative leverages its strengths and resources as a partnership to develop and implement local initiatives that will empower consumers, improve environmental quality, drive economic growth, and reduce the San Diego region’s reliance on oil.  The collaborative is working toward a more consumer-focused, environmentally conscious energy future by addressing San Diegan’s 21st century energy needs.

Click here for the Smart City San Diego website

A microgrid is a localized grouping of electricity generation, energy storage, and loads that normally operate connected to a traditional centralized grid.  The microgrid at University of California, San Diego (UCSD) is one of the best examples of an electricity network that provides local control yet is interconnected with the larger electricity grid.

Recently the Rocky Mountain Institute visited UCSD to study and document the microgrid that controls and integrates electricity supply and demand on the campus.  One result of their visit was a six minute video that spotlights the groundbreaking work being done on the La Jolla campus

At UCSD, the microgrid provides the ability to manage 42 megawatts of generating capacity, including a central cogeneration plant, an array of solar photovoltaic installations and a fuel cell that operates on natural gas reclaimed from a landfill site. The central microgrid control allows operators to manage the diverse portfolio of energy generation and storage resources on the campus to minimize costs. In addition, the campus can “island” from the larger grid to maintain power supply in an emergency, as in the case of the power blackout that struck parts of Southern California, Arizona and Mexico in September 2011.

The microgrid at UCSD provides a living laboratory to experiment with integration and management of local resources and to optimize the use of these resources in interaction with market signals from the larger grid.

Click here to watch the video.

Articles of Interest
Solar forecasting and microgrids
Understanding the Role of Buildings
UC San Diego is a campus-wide living laboratory for sustainable energy

Soitec, a world leader in generating and manufacturing revolutionary semiconductor materials for the electronics and energy industries, dedicated its new North American solar headquarters and manufacturing plant in San Diego at a ceremony held on Friday, December 16.  Governor Edmund G. (Jerry) Brown Jr, provided remarks at the event.  Also participating in the factory dedication were San Diego Mayor Jerry Sanders, Jessie J. Knight, chairman and CEO of San Diego Gas & Electric Company (SDG&E), California Public Utilities Commissioner (CPUC), Timothy Simon and Jim Waring, CEO of CleanTECH San Diego.  They were joined by governmental officials and over 300 community and business leaders that attended the dedication event.  The factory is located in San Diego to supply more than 300 megawatts (MW) in solar projects to provide electricity to SDG&E.  All Power Purchase Agreements (PPAs) have been approved by the CPUC.  The new factory will enable a manufacturing capacity of 200 MW of Soitec’s fifth generation of Concentrix concentrator photovoltaic (CPV) modules, with the opportunity for future expansion to double the capacity to 400 MW per year.

Soitec’s highly efficient, durable CPV systems have enabled the company to plan for more than 300 MW in utility-scale solar power plant projects throughout the Southwest U.S., including 155 MW in PPAs with San Diego Gas & Electric, approved by the California Public Utilities Commission (CPUC) last month. Additionally, a power purchase agreement for up to 150 MW for the Imperial Solar Energy Center West project, another project that currently proposes to use Soitec’s CPV technology, was approved by the CPUC on December 15.  Tenaska Solar Ventures, LLC, an affiliate of independent energy company Tenaska, is developing that project.  

Click here for a brochure of the Concentrix concentrator photovoltaic (CPV) module.

“SDG&E has signed more contracts using CPV technology than any other utility in the world – a distinction we’re proud of,” said Jessie J. Knight, Jr., chairman and CEO of SDG&E.  ”At the time we began our talks with Soitec, we realized we had a unique opportunity to negotiate not only a good contract for solar energy at prices that competed head-to-head with other technologies, but also to solidify an agreement that would bear fruit for years to come in new local jobs and overall economic benefits.  From a reliability and grid stability perspective, this technology is far superior to other typical ground-mounted arrays.”

Soitec employs a distributed manufacturing model which locates CPV module factories close to its customers to provide the most efficient and environmentally beneficial green power.  The distribution model also calls for a large percentage of local content and local job generation.

“Soitec’s new facility will create hundreds of well-paying jobs and build on San Diego’s growing reputation as one of the world’s leading clean-technology clusters,” commented San Diego Mayor Jerry Sanders.  ”We are so honored and proud to welcome Soitec to the San Diego community, and I know that San Diego’s collaborative business community will continue to work with Soitec to ensure the company’s success and prosperity.”

Governor Brown noted, “I’m glad to be here for the dedication of Soitec’s manufacturing plant. The expansion of clean energy businesses is a direct result of legislation mandating that one-third of California’s electricity come from renewable sources by 2020.  That’s a goal and we’re going to meet it. In fact, we are going to do better.”

The Future of the Electric Grid was published this week by the MIT Energy Initiative.  The 268 page report aims to provide a comprehensive, objective portrait of the U.S. electric grid and the challenges and opportunities it is likely to face over the next two decades.  It also highlights a number of areas in which policy changes, focused research and demonstration, and the collection and sharing of important data can facilitate meeting the challenges and seizing the opportunities that the grid will face.  The report shows that with new policies, the electric grid in the United States could handle the expected influx of electric cars and wind and solar generation.

Much of the report relates directly to developments in the San Diego region.  Chapter 5 is about The Impact of Distributed Generation and Electric Vehicles.  Chapter 8: Utility Regulation touches on the current challenge in San Diego to have a rate structure for distributed generation which is equitable for all parties.

(From page 182 of the report), “The distortions caused by these implicit subsidies rise with the penetration of distributed generation and with energy conservation more generally.  Consider, for example, proposed “zero net energy” buildings: if network costs continue to be recovered on a per-kWh basis, these customers could in theory receive all the benefits of being connected to the grid, drawing and injecting power on demand, while paying little or nothing toward the cost of the system or the option to use the network.”  Of course, the opposite side of the issue is also compelling.

Click here for the complete report and here for the abstract.

The multidisciplinary effort of the MIT Energy Initiative to generate The Future of the Electric Grid included economists, engineers and, of course, graduate students from MIT and from without.  Click here for an excellent video of the introductory presentation by the study c-chairs of the report. 

The last two sections of the report include a useful Glossary plus a list of Acronyms and Abbreviations.

How do you NOT drive a car 8.4 million miles?  The new High Tech Elementary and High Tech Middle Chula Vista students know. 

They recently helped do just that by adding a San Diego Gas & Electric (SDG&E)-owned solar system to their school’s rooftop — as well as adding solar to their curriculum.

This work marks the 25th project like this for SDG&E’s “Sustainable Communities Program,” which now totals three megawatts of clean energy. This energy goes back onto the grid which benefits each of the project’s surrounding community. The three megawatts of clean energy is equal to: NOT driving a car 8.4 million miles, powering 2,000 homes, saving 6.4 million pounds of greenhouse gases each year, planting 98,000 trees or removing 722 cars from the road.

Flip that switch!

Dave Geier, vice president of Electric Operations for SDG&E helped the High Tech Elementary and High Tech Middle Chula Vista students flip the switch for their rooftop solar system, marking the third solar project SDG&E has done with the charter school.

The effort includes a curriculum where students learn about renewable energy and energy efficiency.

The schools are seeking LEED Platinum certification from the US Green Building Council and were designed to be nearly 26 percent more energy efficient than required by California Building Codes. Because of these efforts, Geier also presented the school with the “SDG&E Sustainable Champions Award” and a check for $83,000 from the energy efficiency incentives the school was able to receive.

Sustainable communities are growing

Geier spoke to hundreds of students in the audience about how SDG&E is creating sustainable communities throughout the region.

“Moving forward, Sustainable Communities Program projects will incorporate advanced energy storage and electric vehicle charging stations,” said Geier. “These will serve as models for SDG&E’s smart grid that will ultimately predict and ‘intelligently’ respond to the changing needs and actions of customers by efficiently delivering sustainable energy when it’s most needed.”

The Sustainable Communities Program focuses on solar, fuel cells and energy storage for schools, municipal facilities, large multi-family mixed use developments. The program team collaborates with builders to construct sustainable green buildings that are highly energy efficient.

About the UCSD microgrid Forbes magazine said, “First light for what the new smart grid architecture will look like is already visible”.  It is an integral part of a much larger campus community effort.  Click to learn about Sustainability 2.0, A Living Laboratory.  Click here for Byron Washom’s presentation, Local Impact, National Influence, Global Reach. 

My favorite educational experience has always been show and tell.  We were treated to a tour of the campus for a first-hand look at the key components of the evolving energy system.  On the very day we were there the largest full cell on any college campus was being activated for the first time.  Manufactured by FuelCell Energy, Inc., the 2.8-megawatt fuel cell will provide about 8% of UC San Diego’s total energy needs.  In conjunction with the City of San Diego and Encinitas-based BioFuels Energy, the renewable-energy project will turn waste methane gas from the Point Loma Wastewater Treatment Plant directly into electricity without combustion.

Directly opposite the site of the huge fuel cell are two impressively large solar arrays designed and fabricated by Soitec and installed on the campus for evaluation.  The first solar installation was a progressive step which led to San Diego Gas & Electric signing contracts with Soitec for 125 megawatts of solar power.  The second is the fifth generation of Soitec’s concentrator photovoltaic (CPV) system which will generate about five times more electricity with a fractionally larger footprint. 

The new system consists of 12 CPV modules, each generating more than 2 kW of peak power.  For this new product, Soitec has reconfigured its Concentrix modules to reduce the number of parts per CPV system, making installation in the field simpler and faster.  By leveraging the field-proven CPV cells, high concentration ratio and silicone-on-glass Fresnel lens construction used in previous generations of Concentrix products, the new system delivers the same high reliability and life expectancy.

Soitec’s two-axis-tracking CPV systems are well suited for installation sites with high direct solar radiation.  The systems produce a high, constant power output curve throughout the day and are able to match peak-load demands.

Soitec has begun shipping demonstration units to project sites.  Plans call for volume production to ramp in the first quarter of 2012 at the company’s manufacturing facility in Freiburg, Germany, and later at Soitec’s planned new factory in San Diego.

The last photo is of the partially completed, fifth generation Soitec CPV system on the UC San Diego campus as of October 12, 2011.

Photo courtesy Solar Power, Inc.

Solara sought to bring solar power to all of its tenants and was forced in install separate arrays of panels for each and every unit.  This meant taking a dozen panels at a time, wiring them to individual solar inverters (to convert energy from DC to AC), and running separate cabling from each cluster of solar panels directly into each tenant’s separate electricity meter.  Clearly, this was not the most efficient way to deliver power in an MTU property.

A Better Way?

In 2008, the California Public Utilities Commission (CPUC) created a program called “Virtual Net Metering”, or “VNM” specifically for Multifamily Affordable Solar Housing (MASH) projects like Solara.  (CPUC decision 08-10-036.)  

Using VNM, a property could install solar panels and feed all of the energy into a single meter with a single inverter, and virtually divide the credit for energy production across a series of meter numbers provided to the utility.  With VNM, each individual unit would not require its own inverter and separate wiring, making it an elegant and efficient solution that significantly reduces solar installation costs.  Unfortunately, under the 2008 decision, VNM was only available for MASH projects.  Until now.

CPUC Expands VNM

In July 2011, the CPUC approved decision 10-05-004 to expand VNM beyond the “MASH only” restriction and make it available to all multi-tenant and multi-meter customers in residential, commercial and industrial properties.

This means that property owners can now install solar PV on their apartment buildings or commercial multi-tenant properties and virtually distribute those benefits across various tenants, even if those tenants are not physically connected to the PV array.

The decision also elucidates the fact that properties can utilize VNM regardless of their participation in the California Solar Initiative (CSI) rebate program.  Therefore, even if the state incentive programs become fully subscribed, a property could still use VNM to distribute solar benefits to its tenants. 

Building owners in California can now offer cost-effective renewable energy solutions to tenants, allowing them to enjoy lower energy costs and hedge against future escalations in utility rates.  Don’t be surprised if you begin to see apartment buildings and commercial office buildings advertising the availability of low cost solar energy bundled into the cost of rent, or included with the building as an amenity.

Next Steps for VNM?

One of the most promising applications of VNM would be an expansion to allow the trading of energy credits beyond contiguous parcels under common ownership.  VNM is an excellent option for tenants of buildings that cannot or will not go solar.  For example, the complex may have shading that prevents solar installation. Conversely, it may receive plenty of sunshine, but lack the necessary roof space to accommodate all tenants.

Residential apartment/home renters have no real options since they technically don’t own the roof over their heads.  However, many could benefit from the advantages of renewable energy.  So, what if there was a way to “rent” a solar panel inside a solar farm located in an unused plot of land, instead of on the roof that they don’t control?

Taking the CPUC 10-05-004 decision a step further, what if VNM could be used to allocate credits across town and not just on the premises of a particular MTU project?  Could that two-acre vacant plot be used for a “solar garden” which could sell “shares” of generation to individuals throughout the utility service area?  This concept of solar gardens (sometimes called “off-site solar”) is currently prohibited by the CPUC, but a bill introduced in February 2011 in the California state assembly (SB 843) aims to allow these gardens to grow and flourish.  You can learn more about SB 843, also known as the Community-Based Renewable Energy Self-Generation Program, at this website: http://www.e2.org/jsp/controller?docName=campaignDisplay&activityName=SB843.

Investment Grade Solar Projects

Solar gardens, as an extension of VNM, provide a very elegant solution to the collateralization problem faced in traditional equipment financing and solar leases: default risk. 

For example, if Joe Homeowner leases a car and stops making payments, the car can be repossessed and sold in a secondary market.  This is possible because the loan can be secured by the collateral of the underlying leased asset (the car). 

Unfortunately, solar assets on a rooftop are a little more difficult to repossess and the secondary market for panels is almost non-existent.  As a result, interest rates for solar leases are often in the high teens, as the investment community views them as unsecured consumer debt, much like a credit card.

With a solar garden, however, the assets are placed in a central facility, off-site from the consumer and similar to a traditional community garden (sometimes called “Community Supported Agriculture”, or CSA). 

Under a CSA model, people pool their capital, plant a garden and grow a basket of crops.  Every week, when the fruits and vegetables are harvested, each person receives their “share” of crops based on their individual ownership participation. 

The default risk is mitigated because when Joe Homeowner stops paying his CSA bill, his share of tomatoes is simply given to somebody else and the CSA subscription can be resold to another participant.  In the event of a default, no physical assets need to be repossessed from Joe Homeowner’s property.

In a solar garden, when a subscriber defaults, there are no panels that must be removed from their roof.  Rather, the solar garden can sell the subscription to somebody else and allocate the power “virtually” to a different meter.  This makes it easier for institutional investment to support community solar projects and allow more solar gardens to grow.

Feed-in Tariffs and VNM

A model where power is generated and fed into the grid may sound similar to a Feed-in Tariff.  However, a Feed-in Tariff (a policy mechanism implemented very successfully in Germany and other European countries) pays the project owner a fixed, agreed-upon rate for their generation.  While Feed-in Tariffs are themselves a very elegant solution, they have created some controversy in California around the pricing mechanism and the specific rate at which the utility should be required to purchase energy.

Solar gardens, on the other hand, don’t require the utility to determine a price at all.  Instead of paying a dollar amount, they “pay” a certain number of kilowatt hours (kWh) by virtually re-assigning the energy credit to a different meter.  For example, if a solar garden produces 50,000 kWh in a given month and is divided equally among 100 subscribers, each person would receive a credit on their bill for 500 kWh.  If a particular customer consumed 700 kWh that month, their utility bill would reflect a 500 kWh credit and they would only be charged for 200 kWh.

Next Steps?

Virtual Net Metering (VNM) has proven to be an effective solution for MASH properties and has now been approved for other multi-tenant applications such as apartment buildings and commercial offices.  As a result of this decision, scores of MTU properties will likely expand their renewable energy footprint beyond common areas and into the spaces occupied by individual tenants. 

The decision to expand VNM will enable a proliferation of distributed generation.  However, to take this program to the next level, the geographical boundary restrictions must be lifted.  The Community-Based Renewable Energy Self-Generation Program (SB 843) would expand the allowable VNM footprint beyond MTU buildings and allow individual renters (residential or commercial) to enjoy the benefits of renewable energy even if it is not physically installed at their location. 

This expansion would create a fertile environment for institutional investment which has largely shied away from renewable energy because of the lack of collateralization and negligible salvage value of the underlying asset.  VNM and solar gardens solve this problem and will open the door to significant renewable energy development.

Lee Barken, CPA, LEED-AP is the Energy and Cleantech practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and as Vice-Chair of the WREGIS Stakeholder Advisory Committee.  Lee writes and speaks on the topics of renewable energy project finance, green building, IT audit compliance and wireless LAN technology.  You can reach him at 858-350-4215 or lbarken@hwcpa.com.

On Friday Dr. Peter Diamandis, founder and CEO of the X Prize Foundation, was the keynote speaker for the annual venture summit of the San Diego Venture Group.  This was my second opportunity to hear the dynamic Diamandis present.  His work is focused outside the box, but not so far as to be non-productive; in summary, “audacious yet achievable”.

The X PRIZE Foundation is the leading nonprofit organization solving the world’s Grand Challenges by creating and managing large-scale, high-profile, incentivized prize competitions that stimulate investment in R&D worth far more than the prize itself.  The first two X Prize competitions awarded $20 million to the winners.  In May the X PRIZE Foundation announced that they would collaborate with Qualcomm Incorporated to design the Tricorder X PRIZE, a $10 million prize to develop a mobile solution that can diagnose patients better than or equal to a panel of board certified physicians.

In addition to active X Prize competitions there are others which are in development waiting funding or under consideration including several in the category of Energy & Environment.  The X Prize website lists a dozen “audacious yet achievable” topics for consideration.  (click to link)

• Aviation Battery (Lite/Heavy)
• Carbon Utilization
• Electric Aviation
• Energy Awareness
• ePod/Home Energy Storage
• Featherweight Solar
• Featherweight Wind
• Race to Zero CO2
• Rapid Drilling
• Residential Waste to Power
• Robotic Mole
• Solar Pavement

In particular I am intrigued with Carbon Utilization and Solar Pavement.

Carbon Utilization

We recycle aluminum, glass, paper, plastic, and yard waste – why not carbon? As of now, no company has successfully commercialized a carbon utilization technology. Current government funding is narrowly focused on ultra-expensive geologic sequestration, which treats carbon as a liability, with virtually no attention to utilization technologies, which treat carbon as an asset. A Carbon Utilization competition crosses political boundaries and environmental ideologies by finding profit in reducing emissions through technological solutions. The goal would be to develop radical new technologies that solve the global carbon challenge by recycling CO2 into brilliant new products. The winning team must create a system that cost-effectively transforms carbon emissions from coal-based power plants into beneficial products. This must be accomplished while maintaining energy producers’ ability to provide reliable cost-effective “base load” power to their customers, including those below the poverty level.

Solar Pavement

While nearly 3% of US land area is covered by pavement, it provides no benefit other than surface structure. A significant impact could be achieved if it were made to also produce power. The goal of the Solar Pavement competition will be to turn blacktop surfaces into photovoltaic power generation sources. The winner will be the first team to convert a one acre parking lot surface into a generator that can produce a peak power output of 50kW of solar energy.

San Diego has a culture of technology early adapters.  San Diego has been one of the top markets for hybrid EVs like the Toyota Prius.  California ranks first in Prii sales and second only to Vermont in Prii Per Capita.  (Yes, the plural is Prii).  Hybrid EV owners are predisposed to consider plug-in EVs.

San Diego is one of 16 cities selected under a DOE grant headed by ECOtality to implement the largest-ever rollout of electric vehicle infrastructure.  Federal grants plus matching funds will total $230 million.

Because the ultimate utility of EVs is tied to the establishment of a charging infrastructure, Nissan, Chevy, Ford and others have focused on a limited number of metropolitan regions including San Diego.

San Diego is the #1 solar city in the #1 solar state.  40 percent of Leaf owners have solar panels according to the California Center for Sustainable Energy (Source North County Times). 

San Diego’s terrain and climate is less taxing on EV batteries than much of the U.S.

Successful integration of EVs to the grid is a task of great complexity.  For the past two years, San Diego Gas & Electric’s advancements in smart grid infrastructure has earned them recognition as the most intelligent utility in America by IDC Energy Insights and Intelligent Utility magazine. 

General Electric has partnered with the City of San Diego, San Diego Gas & Electric, the University of California San Diego and CleanTECH San Diego in Smart City San Diego, a public-private collaboration that aims to improve the region’s energy independence, empower consumers to adopt electric vehicles, reduce greenhouse gas emissions and drive economic growth.

To boost use of electric vehicles, the General Services Administration is installing charging stations for government vehicles in San Diego and four other cities.

The University of California, San Diego has been at the center of several major initiatives which are contributing to the region’s growth as a clean energy center.  The EVs which will be used by students, faculty and staff will form a living laboratory of human behavior and technology.

Qualcomm and ECOtality have entered into an agreement to implement cellular connectivity into charging stations. The solution will allow ECOtality to use a commercial cellular network to manage its Blink brand charging station operations, transfer usage data, download firmware updates and publish availability to electric vehicle drivers in real time.

CleanTECH San Diego is an important nexus for regional clean technologies of all types.  You can click through to their website to learn about their crucial mission.  While you are there you can register for the CleanTECH San Diego Electric Vehicle Showcase.  Indy 500 legend and electric vehicle convert Danny Sullivan will be the keynote speaker.  UC San Diego’s Byron Washom will lead a panel including the CEO of Flux Power, Chris Anthony and General Electric’s Michelle Lesh.  Held on the LEED Silver certified Port Pavilion on the Broadway Pier, the Showcase will include a variety of demonstrations of EV technologies and cars. 

Show up on Thursday with a fistful of business cards to network harborside and kick the tires of the EVs that are in the poll position in the race for energy efficient transportation.  Register here today. 

CleanTECH San Diego’s Electric Vehicle Showcase

Date: Thursday June 9, 2011    4 PM to 7 PM

Port Pavillion on Broadway Pier
1000 North Harbor Drive
San Diego, CA 92101

Click here to view Danny Sullivan’s classic moment in Indy 500 history.

Nearly a year ago, I wrote about the unanimous decision of the California Public Utilities Commission (CPUC) to allow Tradable Renewable Energy Credits (T-RECs) in California.  If you’re not familiar with a T-REC, it is, quite simply, an environmental commodity representing the environmental attributes associated with one MegaWatt hour of renewable energy generation.

According to the CPUC, under the new rules, T-RECs “can be purchased by a utility and traded separately from the underlying energy produced by a renewable generating facility.  These energy credits can then be applied, by the utility, toward their renewable energy compliance goals.”

Within days of last year’s March 11 decision, a flurry of controversy erupted.  A joint petition to modify the decision was filed by San Diego Gas and Electric, Southern California Edison and Pacific Gas and Electric, the three Investor Owned Utilities (IOUs) most affected by the T-REC ruling.  Additional modifications were requested in a petition by the Independent Energy Producers Association. 

Increasing pressure was felt throughout Sacramento from the Governor’s desk to the State Legislature.  A stay of the T-RECs decision was issued on May 6, 2010.  For more than eight months, the short lived T-REC program remained in a frozen, fossil-like condition.

Back From Extinction

“I think most of you are painfully aware that this commission has gone round and round on the issue of the role of Tradable Renewable Energy Credits in the RPS program,” said CPUC Commissioner Michael Peevey in his opening remarks at the January 13, 2011 CPUC meeting to consider a new decision for the T-REC program.

The CPUC’s January 13, 2011 decision reverses the stay from May 6, 2010 and reaffirms the original March 11, 2010 ruling with some minor modifications. 

“In largely rejecting the petitions to modify that were filed by the utilities and the IEPs, this decision effectively restores the decision that this commission voted [on] in March of last year.  It was, I think, a sensible and reasonable decision.  I supported it at the time, and I support today’s decision,” said Commissioner Nancy Ryan.

 In short, the rules going forward allow the use of Tradable RECs, including out-of-state generation, to meet compliance requirements under California’s Renewable Portfolio Standard (RPS), with the following notable exceptions:

 - T-RECs can only be used to meet 25 percent of an entity’s compliance obligation.

- Transactions are capped at $50 per T-REC.

- The 25 percent and $50 per T-REC limitations are temporary and remain in effect only until December 31, 2013.

“The basic approach of the March decision and today’s decision is to wade gradually into the emerging market for Tradable Renewable Energy Credits and I think that’s a prudent thing to do,” said Commissioner Ryan.

Since the limitations expire at the end of 2013, it provides an opportunity to revisit and make adjustments, as necessary.

“This training-wheels approach to market development will give the Commission an opportunity to more closely monitor dynamics to the end of 2013, at which time this commission will evaluate the need for these particular regulatory mechanisms,” said Commissioner Timothy Alan Simon, adding this hint about the possible sun-setting on the restrictions, “I look forward to a more robust and less restrained T-RECs market in the near term to enable cost effective RPS compliance for our rate payers.”

This sentiment was echoed by Commissioner Ryan, who said, “I think it’s appropriate that we have some role for RECs at the present and I hope to see a more open market in the future.”

Do more T-RECs mean lower costs for rate payers?  Will the broader adoption of out-of-state T-RECs translate into a better deal for California consumers?

Renewable Generation Civil War

Among the most contentious and controversial issues surfacing in the T-REC battle was the question of allocating in-state versus out-of-state production.  Under a T-REC program, a compliance obligation in California could be met by a T-REC generated in any of 14 states participating in the Western Electricity Coordinating Council (WECC).

“For many, the issue of Tradable RECs has become a proxy dispute over the role of in-state versus out-of-state facilities in meeting that state’s renewable objectives,” said Commissioner Peevey.

The core of this issue seems to be that T-RECs, which allow out-of-state generation, will stimulate green jobs outside of the state subsidizing that generation.  On the other hand, if California utilities are forced to purchase “Made in California” T-RECs exclusively, it will increase the cost of compliance, which is a price ultimately borne by the rate payer.

In short, multiple objectives are in conflict.  This begs the question:  Is the goal to stimulate jobs in California, or is the goal to stimulate renewable energy generation?  Is California trying to have its cake and eat it too?

“T-RECs is a very controversial issue, and I think the reason that it’s so controversial is that it casts in very high relief some of the internal conflicts about the RPS program and the concept of a renewable portfolio standard in California,” said Commissioner Ryan.

Among the goals mentioned by Commissioner Ryan are the reduction of GHG emissions, improvements in local air quality, local economic development, saving consumers money and promoting the development of new technologies.

“That’s just a few of the items on the list,” said Ryan.  “We can’t have all of those things at once.”

A Balanced Approach

In striking its compromise, the Commission appears to be supporting the general principle of T-RECs as a mechanism to lower costs, but with safeguards (albeit temporary) to experiment with and demonstrate the viability of the program.

“This will give us ample experience with the emerging T-REC market, as well as provide sufficient time to develop appropriate methods to assess the value of different contracts to ratepayers,” said Commissioner Peevey.

“It is, has always been and remains my opinion that having a role for Tradable RECs in the RPS program is a consumer protection measure,” said Commissioner Ryan.  “It provides necessary competition to bundled projects to contain their costs and bring the best value to consumers.”

New Life for T-RECs

It’s taken several years and one false start, but it now appears that the T-REC market in California is ready for its first trial run.

In closing the T-REC discussion, Commissioner Peevey added some comments in his characteristic light-hearted and humorous style.  “I think we finally resolved something.  Maybe it took a November election to do so, but it’s resolved for the moment.  I know not everybody is happy with this, but that’s how it is and we’re going forward.”

With that, Commissioner Peevey moved the item for a vote and it was adopted.  Welcome to California, mighty T-RECs.

Lee Barken, CPA, LEED-AP is the Energy and Cleantech Practice Leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and as Vice-Chair of the WREGIS Stakeholder Advisory Committee.  Lee writes and speaks on the topics of renewable energy finance, green building, IT audit compliance, wireless LAN technology.  You can reach him at 858-350-4215 or lbarken@hwcpa.com.