Though the Los Angeles Department of Water and Power (LADWP) just began wrapping up its moderately successful pilot feed-in tariff, it has already decided to move forward with the full 150 MW FIT, well above the 75 MW requirement the utility faces by 2016. The decision, announced August 14th, will put the utility well on the way to the 600 MW required by 2020.
Why the rush? Because the federal tax credit for solar has not yet been extended past 2016, the utility is anxious to get its FIT program up and running before it potentially expires. Projects that monetize the 30% tax credit will be able to sell electricity to the utility at lower prices than those that do not. And because the utility is required by state law to build a share of the overall California target by 2020, timing has never been better.
LADWP issued the pilot RFP as a reverse-auction with the intention of contracting no more than 10 MW of capacity, and received 26 bids that totaled 7 MW. However, only 4.6 MW will receive contracts pending interconnection studies, since according to the utility the other projects had costs significantly above market. Contracts will be signed by late October. Based on the results from the pilot, LADWP is wise to request double the capacity it is required by law to add.
All projects must be rooftop systems located within the city of Los Angeles. While 150 MW might seem like a great deal to deploy in a city within the next few years, a recent Los Angeles Business Council study concluded that the city has nearly 20 square miles of solar-appropriate rooftops in its vicinity, or roughly 5 GW of potential solar.
The first full solicitation is expected in January, with planning workshops beginning next week to prepare for full council approval before the end of the year. Because contracts for the initial 10 MW have yet to be signed, pricing for this program is still unknown, but will likely be in line with other solar projects in the area. A representative of the program said that while a pricing mechanism for the 150 MW program had yet to be decided, the LADWP is leaning away from using a bid-in system and will consider set pricing instead.
Sol Systems will continue to monitor the progress of the feed-in tariff as it moves through the approval process. Investors and developers interested in learning more about this program, should feel free to contact us at email@example.com.
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