San Diego SEIN Initiative

Determining solar deployment potential city-wide

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The Clean Coalition is excited to be partnering with the City of San Diego on the City’s Solar Energy Innovation Network (SD SEIN) Initiative, which is exploring new ways solar energy can improve the affordability, reliability, and resilience of the nation’s electric grid.

Initiative objective: Determining solar deployment potential on municipal property and city-wide

The primary goal of the SD SEIN Initiative is to analyze the distributed solar potential in San Diego — to assess the potential costs and benefits of local renewables to the City and its residents. Local renewables are defined as being interconnected on the distribution grid within the City boundaries.

Specifically, the work performed under SEIN will determine solar deployment potential on municipal property and city-wide, gleaning lessons learned from past experiences with municipal solar, and developing solar and storage request-for-proposal templates that support municipal procurement of technology to improve city energy resilience.

In parallel, the City of San Diego is working on a number of initiatives that are not directly related to the SEIN program. For example, the City of San Diego intends to:

  • Evaluate policy and programs that will accelerate achievement of the maximum local renewables goals deployment, along with renewables-driven resilience across substation-level grid areas, enabled by Community Microgrids.
  • Begin with behind-the-meter (BTM) solutions that are achievable without policy and program innovations, and without utility facilitation or the establishment of an alternate load-serving entity (LSE).
  • Over-weight benefits to communities of concern (COC).

Wholesale distributed generation: The key to getting higher renewable penetration

Wholesale distributed generation (WDG) refers to distributed energy generation, often commercial-scale solar, that interconnects to the distribution grid and serves local loads while avoiding any use of the transmission grid. Rather than serving one customer, these systems can serve an entire community, while avoiding the expensive, inefficient transmission lines required by remote power generation.

WDG is the market segment that catapulted Germany to its position as a global solar leader — with far less sunshine than San Diego. Significantly, Germany’s solar deployments are almost entirely sub-2 megawatt projects in built environments, interconnected to the distribution grid.

Germany unleashed the WDG segment by enacting a national Feed-In Tariff (FIT). During the 10-year period following the introduction of its FIT, Germany ran laps around the United States, including deploying over ten times more solar capacity than California:

In unleashing WDG, Germany drove down the cost of WDG solar dramatically. Today, with a properly designed FIT, San Diego could procure local solar energy at a very affordable 4-6 cents per kilowatt-hour.

Read more about Germany’s success story and what it means for San Diego.

Transmission Access Charges (TAC) represent a large and growing portion of electricity rates, as illustrated in the following table showing TAC rate projections for San Diego Gas & Electric (SDG&E). Removing this cost from local energy sources that avoid use of the transmission system would save a significant 4.6 cents/kWh in SDG&E territory over the next two decades.

Values shown are in $/MWh, with an annual projected increase of 5% (in 2018 constant $).

Pathways to achieving local renewables in San Diego

The Clean Coalition’s contributions to the SD SEIN Initiative’s goals were to:

  • Survey the City’s solar potential. Because solar siting opportunities in San Diego will predominantly be on built environments like rooftops, parking lots, and parking structures, the Clean Coalition conducted a Solar Siting Survey (SSS) to identify those sites in San Diego; see details below.
  • Create a Guidance and Policy Package for a Feed-In-Tariff Program.

Solar Siting Survey

To set the stage for achieving local renewables in San Diego by 2035, the Clean Coalition conducted a Solar Siting Survey. The Clean Coalition’s unique Solar Siting Survey methodology identifies viable solar siting opportunities across urban environments and evaluates those opportunities based on the interconnection potential of the local grid for each site.

A snapshot from the Clean Coalition’s Solar Siting Survey of the City of San Diego

The San Diego Solar Siting Survey identified approximately 500 megawatts (MWac) of technical solar siting potential for large commercial-scale solar on built environments within the City. The survey pinpointed the location and estimated project sizing for over 120 prospective solar sites that could host solar PV systems of at least 1 MWac.

While a portion of the solar siting potential is on large rooftops, more than 75% is on parking lots and parking structures, which are often overlooked as siting opportunities for clean local energy. In total, this survey identified enough local solar capacity to fulfill the average power needs of about 500,000 homes during peak solar production hours.

Summary of structure types identified

San Diego has even more commercial-scale solar siting potential than was identified in this survey, which focused on large solar projects because they are more cost-efficient than smaller projects and therefore have greater potential to attract project developers and investors. If a smaller minimum project size of 500 kilowatts (kW) were considered, the Clean Coalition expects that the technical solar siting potential in San Diego would increase by a factor of two to about 1 GW; this would double again to 2 GW if considering projects as small as 100 kW.

Feed-In Tariff design

A FIT will simplify the process to build renewable energy projects and sell the power produced in the City of San Diego

The Clean Coalition designed a FIT with streamlined interconnection for San Diego, which is currently in draft form and is being reviewed by the City. A FIT leverages a standardized power purchase agreement (PPA) to bring clean local energy online far more quickly, reliably, and cheaply than any type of auction mechanism.

The importance of using a FIT

While California’s net energy metering (NEM) policy works well for residential solar, it is not well suited to commercial-scale solar for a number of reasons:

  • Commercial properties are often not occupied by their owners
  • Many of these properties have split meters
  • The electrical load of many commercial-scale sites, such as parking lots, is smaller than their generating capacity

A FIT removes all of these issues.

In addition, FITs are far more effective than auctions at bringing WDG solar online. FITs are faster, cheaper, and more reliable because they are simpler for developers, property owners, utilities, and regulators. The standardized contracts and prices of FITs can be approved in a single decision — compared to the many rounds of proposals, evaluation, negotiation, and approvals that delay auctions — saving both time and money.

In sharp contrast, auction processes are expensive, slow, and risky, delayed by many rounds of proposals, evaluation, negotiation, and approvals. This raises costs for all parties, including ratepayers, and results in far fewer projects being built. Across California RPS solicitations, for example, fewer than 1 in 10 project bids were actually developed — which resulted in high administrative costs for the program and exorbitant risks and costs for renewable energy project development.

San Diego FIT details

The design for the San Diego FIT recommends the use of Market Responsive Pricing (MRP), which allows the price paid under the FIT for both solar and storage to adjust based on market response; this ensures that the load-serving entity pays the optimal price for clean local energy. Market Responsive Pricing is critical to successful procurement under the FIT, because it avoids these potential issues:

  • Prices set too high will ensure rapid development of local renewable energy capacity but will result in less clean energy produced for a given budget or cause unnecessary upward impact on electricity rates.
  • Prices set too low will not attract the market to develop the desired amount of local renewable energy capacity.

FIT market potential in San Diego

The FIT also includes a Dispatchability Adder to make renewable energy available whenever needed instead of only when the sun is shining or wind is blowing.

The San Diego FIT design made these recommendations for project eligibility:

  • New resource: The generating resource should be new, meaning that it has not produced or delivered electric energy prior to the date in which the LSE receives its application.
  • Location: The project should be located entirely within the City of San Diego.
  • Technologies: All technologies that are compliant with California’s Renewables Portfolio Standard (RPS) requirements should be eligible to participate in the FIT.
  • Project sizing: The maximum recommended project size was set at 3 MW. This is slightly larger than the sizing in some FIT programs; however, the City of San Diego offers plenty of large project siting opportunities, and this larger size will enable lower pricing for clean local energy through increased economies of scale.

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