California has had little to cheer about since the deregulation of its electricity market, but Sacramento Municipal Utility District (SMUD) is helping put the sun back into the Sunshine State.

SMUD has been a strong proponent of PV technology since 1993 when it launched its 'PV Pioneers' initiative. Keen to learn from PV customer field trials, but with minimal risk to its clients, the utility identified a number of homeowners who were willing to offer their roofspace for residential PV generators. SMUD installed, maintained operated and owned these early PV pioneers systems, but now homeowners have the opportunity to buy their own system via the utility which provides financing and helps buy-down system prices through bulk-purchasing.

The Sacramento District now has over 9 MW of grid-connected PV installed under SMUD’s various schemes, with a further 6 MW due for completion by the end of 2003. As well as some 750 residential PV Pioneers each with 2-4 kW systems on their rooftops, there are a further 70 larger SMUD-supported systems on roofs and façades of commercial buildings, parking structures and free-standing arrays.

Electricity crisis could be to PV's benefit In 1994 deregulation of the Californian electricity industry seemed like a great idea: generation and transmission/distribution would be separated; in the liberalised market the new generators would have to compete to sell their power to the utilities via a two-tier pool arrangement. The utilities would inevitably opt for the lowest priced power which would have generators battling to under-bid each other, driving down the pool price and making for a buyers market. The bulk of the generated power would be offered on a day-to-day basis to the first tier of the pool (the California Power Exchange – CPE). Last minute power purchases needed to balance supply and demand statewide would be managed through the second tier (the Independent System Operator – ISO). The three main utilities were persuaded to sell off their generation plant, mainly to companies from outside the state, helped by a USD 16,5 billion sweetener to cover ‘stranded losses’ (investments in uneconomic nuclear plant which would not be recoverable). Initially all seemed to be working well. Customers saw a 10% drop in the retail price, capped until March 2002, as the utilities expected the pool prices to fall. Within a matter of months, however, some of the power producers apparently began to withhold power from the CPE, thereby engineering a supply shortage which the ISO had no option but to overcome. The same producers were then able to offer their top-up power to the ISO at exhorbitant prices. California's problem was not helped by drought-induced hydro-power shortages in neighbouring North-Western States. Caught between the capped retail market and the free-floating pool, the utilities suffered massive losses, even to the extent of bankruptcy claims in one case. With the forthcoming retail price cap removal, customers' bills seem certain to increase. In combination with attractive rebates from the California Energy Commission and various solar buy-down initiatives it looks like the Sunshine State is on the verge of a PV boom.

SMUD is now cooperating with local residential building developers to offer PV equipped new-build homes. 150 kW is expected to be installed under such schemes this year, and there is a very high level of interest amongst house buyers for PV-ready housing packages.

Thanks in large part to the Utility's backing of PV technology, installed system costs in Sacramento have been slashed by 75% in the last 8 years to around 4,5 USD/W. This is expected to fall by a further third over the next two years. More affordable PV systems coupled with customer concerns about reliability of conventional power supplies have resulted in a surge of interest in rooftop PV systems throughout California. SMUD has had to drastically increase its own sales and order processing teams, and contract additional installers to handle the extra demand. The PV Pioneer programme was expected to service up to 200 rooftop system orders this year. Already potential orders for 2001 have reached 1 500 systems.

Earlier this year SMUD’s endeavours were honoured with a first prize in the Energy Globe Awards. The Awards which recognise outstanding initiatives in the field of energy efficiency and renewable energy attracted some 1 200 entries in 2001.

Contact:

• SMUD
  Telephone: +1 888 732 5501

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