News
Jordan Rose, Court Rich and Ryan Hurley file Arizona Corporation Commission case on behalf of SolarCity to allow solar panels on rooftops at schools, governmental entities and non-profits
State weighs solar proposal seen as key test
by Ryan Randazzo - Jul. 6, 2009 12:00 AM
The Arizona Republic
A solar-power company's plan to put panels on two Scottsdale school roofs could end up changing the way solar energy is bought and sold in Arizona.
If approved by state regulators, the plan could help expand the use of renewable energy by helping schools, governments and other big users get solar panels without the big up-front costs.
If the plan is rejected, backers say, it could choke the state's burgeoning solar-power movement.
Hurdles are expected. The proposal essentially would let solar-panel makers sell electricity without the oversight of state regulators, and at least one Arizona utility objects.
The proposal changes the common business arrangement for solar power. In a typical scenario, contractors install rooftop solar arrays for a large facility. The facility buys the panels or leases them from the installer. The facility then uses its own power, which comes free from the sun, and sells any extra back to an electrical utility.
The proposed system at the Scottsdale schools would be different. Foster City, Calif.-based SolarCity Corp. would install $10 million worth of solar panels at Coronado and Desert Mountain high schools. The school district wouldn't pay for the panels. Instead, it would buy the panels' electricity from SolarCity.
The benefit is the lack of any up-front cost.
Many large buildings can offset the cost of panels with federal incentives. But public schools and government buildings can't get those incentives, and SolarCity says that limitation is slowing down the growth of solar power.
SolarCity could use the incentives itself, pay for the systems and then sell the subsidized power to the schools.
"During this time of economic chaos, schools could save money on their energy costs and put teachers back to work," SolarCity lawyer Jordan Rose said. "They can put money back in the classroom."
The company says schools could save $4.7 million on energy during the next 15 years if the deals are approved.
The setup essentially would make SolarCity a utility because it would generate electricity and then sell it. And that means that the state's utilities regulator, the Corporation Commission, would get involved.
The plan becomes a test case for another request already filed with the commission. In October 2008, an industry group, the Solar Alliance, asked regulators to approve similar kinds of deals. It still has not gotten an answer as the Corporation Commission has struggled without a real-world example.
"This is the perfect test case," Rose said.
The Solar Alliance asked for a ruling regarding big users in general, while SolarCity is asking for an exemption to serve schools and government buildings.
In either case, schools or businesses would still be connected to their regular utility to supply power beyond what the solar-power systems generate and at night.
Salt River Project and Arizona Public Service Co. likely will be asked to testify in the new case. SRP has challenged the Solar Alliance case, while APS didn't raise any serious objections.
The commission requires utilities to get 15 percent of their energy from renewable sources like solar by 2025.
SolarCity asked regulators for a speedy decision so the company can access federal stimulus money this year for the projects.
"There are very big issues at stake in this case, and the commission is committed to resolving the issue once and for all as quickly as possible," Corporation Commission Chairwoman Kris Mayes said. "The entire solar community is watching and waiting for this case to be resolved."
Mayes said she couldn't offer an opinion on a pending case.
SolarCity argues that the Corporation Commission doesn't need to regulate the energy sales the same way as traditional electric utilities because unlike big utilities, SolarCity is not a monopoly.
The school district received six responses to its request for proposals for solar power, showing that SolarCity faces competition, the application said.
If regulators don't approve the SolarCity deal, officials see little hope that such agreements will be permitted for other large operations, which could be a significant blow to the rooftop solar business in Arizona.
"Since April, there have been more applications to do (rooftop) solar than has previously been installed in Arizona ever," said Tom Alston, the state head of the Solar Alliance. "But the scary thing is, more than half are planning on doing it through a solar-service agreement. It is all resting on whether they will be allowed to do it."
