Solar Shines in Washington State

by Mike Nelson

In May 2005, Gov. Christine Gregoire signed into law Washington State’s Senate Bill 5101. Denis Hayes, the founder of Earth Day, president of the Bullitt Foundation and chair of the American Solar Energy Society (ASES) of trustees, called it no less than “the most important solar legislation ever introduced in any American state legislature.” What makes this law so unique?

SB 5101 establishes a production incentive for homeowners, businesses and local governments that install solar electric systems, wind turbines and biomass-powered generation. No other U.S. jurisdiction has implemented a statewide program modeled on the highly successful German production incentives.

Unlike the incentives in California, New Jersey and Oregon, which pay based on system size, Washington’s law pays for power produced. If a system under-performs or quits working, the owner doesn’t get paid. The hope is that the law will promote careful installation, operation and maintenance procedures. Effectively, owners of solar systems become micro-utilities, producing a revenue stream from their investment in renewable resources.

As Tom Starrs, past Chair of ASES and vice president for marketing and sales at the Washington-based Bonneville Environmental Foundation, observed, “The eyes of much of the country will be on this performance-based approach.”

Legislators Targeted Job Creation

Germany compares well with Washington. Germany has North Sea clouds; Washington has Seattle rain. German electricity rates are higher, but ours are creeping up, and the cost of new generation is comparable. Germany has adopted legislation that makes solar a good investment for homeowners. So has Washington.

SB 5101 sailed through the legislature last spring with nearly unanimous, bi-partisan support in both houses. The bill’s prime sponsors were Democratic State Sen. Eric Poulsen and Republican Sen. Bob Morton. The final vote represented an effort to expand Washington’s solar manufacturing industries and create jobs. Washington is strong in crossover industries such as aerospace and software. These industries provide a ready labor pool for an expanding solar value chain.

Washington hosts many leading solar companies. REC Silicon produces silicon in Moses Lake, while Shell Solar grows ingot for wafers in Vancouver. Outback Power Systems and Xantrex Technology manufacture inverters. System integrators, dealers and installers operate statewide. If Washington can attract wafer fabrication and module production, we will have captured the entire manufacturing value chain.

RE Adopters Await Big Paybacks

The last of the major hurdles to implementation are being cleared. Washington’s electric utilities developed consistent interconnection standards – no easy feat in a state with more than 60 utilities. Under the law, Washington utilities receive a tax credit for production incentives they pay to their customers. As a result, renewable energy amounts to a low-cost generating resource for utilities, as their customers install and finance the technology.

The Washington State Department of Revenue is finalizing the rules paying the renewable energy system operators. Customer-generators are expected to begin receiving in early autumn cost-recovery payments for the kilowatt-hours they have generated. These checks of up to $2000 will continue for the next nine years, as long as the renewable energy systems keep producing. With a cap of $2000 a year, the sweet spot for system sizing is about 3500 watts, a good size for many residential inverters. Note that the incentive even applies to existing systems.

Washington’s production incentives pay 15 cents per kilowatt-hour generated, plus the customer-generator gets to net meter his or her system’s output. In Seattle, for example, the electricity rate is about 8 cents, so the value of the energy is the kilowatt-hour earned plus the kilowatt-hour saved. The value of the energy to the customer, when used by the customer, effectively is 23 cents per kilowatt-hour.

In addition, multipliers can be applied to the kilowatt-hour produced. If the systems sports a Washington-built inverter, multiply the kilowatt-hours generated by 1.2, plus the net-metering savings. Again using Seattle’s rate of 8 cents for illustration, the total with the multiplier is 26 cents per kilowatt-hour. An additional multiplier can be used if the system has solar modules manufactured in Washington. That multiplier is 2.4. That works out to 36 cents plus the 8 cents saved, or a total of 44 cents per kilowatt-hour for the solar production.

A Grand Slam occurs for a system with both a Washington inverter and Washington modules. This combination yields 18 cents for the inverter, plus the 36 cents for modules: 54 cents. Add the net-metered value of the power, and the value per kilowatt-hour is 62 cents.

This amount – 62 cents – compares favorably with the German production incentive of 60 eurocents (US 77 cents). But remember, the Germans don’t have net metering. Germans sell their solar electricity at 60 eurocents and buy their utilty power agt about 17 eurocents.

Unfortunately, no Washington firm manufactures solar modules, so the current crop of systems will have to settle for a value of 23 to 26 cents. However, a couple of companies are moving hardware through the listing process with Underwriters Labs.

SB 5101 works. Solar works. Even in Washington.

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Mike Nelson, manager of the Washington State University Northwest Solar Center and founder of the ASES Solar Washington Association chapter, assisted in crafting technical aspects of SB 5101. Nelson and his family went off-grid in 1978 and have lived with solar electric, wind power and solar hot water. He’s installed systems in such diverse environments as the Grand Canyon, downtown Seattle and Micronesia.
Contact him: mike.nelson@northwestsolarcenter.org

FROM Solar Today, a SustainableBusiness.com Content Partner.