PG&E and SolarCity team up for SunShot program competition

In the East Bay, residents pay roughly $0.22 per kilowatt-hour for electricity, about 60 percent above the U.S. average, according to the U.S. Bureau of Labor Statistics. Combine that with near-ideal sunlight most of the year, according to the Department of Energy, and East Bay roofs make prime real estate for photovoltaic (PV) panels.

Yet although prices for PV panels have plunged over 80 percent since 2009, solar still isn’t as cheap as coal or natural gas in most of the U.S., including the East Bay. That is according to Elaine Ulrich of the Energy Department’s SunShot program. “Even though they have come down,” Ulrich said, “they are still not at parity rate.”

Ulrich’s SunShot competition aims to change that, and the East Bay will play a pivotal role. Starting in January, five teams—in Missouri, Connecticut, and three in California, including one representing the East Bay—will compete to reduce the time needed to install rooftop solar panels. Time is money, and SunShot aims to cut the “soft” costs of solar installation: not the panels, wires, mounting or inverters, but the time and money consumed by permitting and procedures.

This “red tape” varies across 18,000 different communities and utility districts in the U.S., according to Ulrich. She holds a doctorate in optical science and has served at SunShot since its inception. “It can take up to 180 days or more,” she said. “There is no reason why it should take more than one week.”

Each SunShot team must install at least ten megawatts of panels, about the size of a small power plant, within 18 months. Each install should take as little time as possible, ideally about a week. The winner gets $3 million in cash—and potentially a competitive advantage in this fast-growing global industry. The East Bay team includes the city of Livermore, Pacific Gas & Electric, and SolarCity, the nation’s largest solar installer.

SunShot is the latest of numerous ambitious solar initiatives at the state and federal levels over the past decade. In 2006, then-Governor Arnold Schwarzenegger signed Assembly Bill 32 into law. AB 32, the Global Warming Solutions Act, committed the Golden State to generating 33 percent of its energy from renewables by 2020. In 2009, President Barack Obama’s Recovery Act—AKA the “stimulus”—budgeted $90 billion for renewable energy, conservation and infrastructure improvements. And despite the well-publicized, taxpayer-subsidized failure of Silicon Valley solar company Solyndra in 2011, the investments and innovations spurred by AB 32 and the Recovery Act turbocharged the solar industry. Solar installations grew exponentially around the world, led by California.

In 2011, Obama and then-Secretary of Energy Steven Chu, a Nobel Prize-winning physicist and former head of Lawrence Berkeley National Laboratory, started SunShot. Based on the NASA “MoonShot” space race of the 1960’s, SunShot’s goal is to make solar energy competitive with fossil fuels by 2020. And in an era of budget austerity, the $250 million per year, market-based SunShot evolved into the Energy Department’s top renewable energy initiative.

In early October, Governor Jerry Brown, who helped spark the first solar boom during the 1970s, signed Senate Bill 350. SB 350 upped California’s renewable energy goal to 50 percent by 2030. So the price of solar needs to keep dropping.

The price parity goal SunShot is shooting for is itself a moving target. The federal investment tax credit for new solar installations, known as the ITC, currently sits at 30 percent. But Congress is likely to drop the ITC to 10 percent in 2017, and maybe zero soon after.

The looming sunset of the ITC is helping to drive the solar boom. Since 2009, according to PG&E, the company has connected solar arrays from about 200,000 customers—one in every four rooftop solar arrays in America. 70,000 PG&E customers have gone solar so far in 2015, up from 45,000 in 2014.

When it comes to permitting, “We’re working to reduce the process from weeks, or even months, down to less than seven days, with the ideal goal of going through the process in a single day,” said Nadim Virani, PG&E’s representative on SunShot. Virani is a senior business process manager specializing in interconnection. That means connecting PG&E’s grid with equipment like rooftop solar panels the utility does not own. And by cutting the red tape on interconnections by putting the process online, Virani said, PG&E “is on target to reduce this to one second.”

Solar installers also must contend with regulations that vary from place to place. “One of the main challenges of our business is a haphazard patchwork of regulations in different localities,” said Valerie Anderson, SolarCity’s point person on SunShot. “SunShot would streamline solar power installations, cutting red tape and making it easier for customers to go solar.”

“It’s been great working with PG&E on this project,” Anderson continued, the goal of which is a “platform to launch the best team’s process”—a platform that could give SolarCity a competitive advantage installing solar panels around the US.

SolarCity, founded by Tesla’s Elon Musk and his cousins Lyndon and Peter Rive in 2006, currently owns over a third of the U.S. market for solar panel installation. The company, whose biggest investors are Wall Street banks and Google, uses a “no money down” financing model similar to automobile leasing. Yet while SolarCity has gained marketshare, it has not turned a profit in three years, and its share price has plunged over 50 percent over the past year.

Teammates PG&E and SolarCity have been at odds for years, most recently this past month. In a series of protests SolarCity staged around the state, including in San Francisco, the company exhorted PG&E and other utilities to “Don’t Block the Sun.”

The bone of contention: net metering. With solar energy, homeowners don’t just buy electricity from utility companies like PG&E; those with PV panels also sell it back to the utility. Net metering keeps track of this two-way energy trade.

Earlier this year, PG&E and other utilities proposed that the California Public Utilities Commission reduce these credits, in order to share the increasing costs of maintaining the electric grid. The debate is part of a larger one over electricity pricing put into place after Enron spurred deregulation of energy markets, caused the 2000-01 energy crisis, then went bankrupt, driving PG&E into Chapter 11 with it.

According to their website, PG&E says that their solar initiatives have cost them over $1 billion in grid-related costs, that the costs are accelerating, and that these costs need to be shared with ratepayers. PG&E also points out that because homeowners who install solar panels tend to be wealthier, the costs for maintaining the grid disproportionately fall on poor people.

But SolarCity does not want costs to shift onto their potential customers. “We would like to work together but ending net metering would harm solar,” said Will Craven, SolarCity’s head of public affairs. “If PG&E’s proposal to the CPUC went through, people would not be able to go solar.”

When asked whether PG&E and SolarCity simply have different visions for the future of solar energy, Craven replied, “PG&E is aggressively anti-rooftop solar.”

PG&E’s Virani paused when asked about SolarCity’s “Don’t Block the Sun” campaign. “For the SunShot competition, we saw an opportunity to come together for the common good,” he said. “This process improvement is something that should be done regardless of what else is going on.”

Correction: Mr. Craven’s quote “We would like to work together but ending net metering would harm solar” was corrected on November 2, 2015.