Wednesday, October 14, 2009 at 11:35:45 AM - by Nate Lew

California, one of the sunniest states in the nation, and one clearly ahead of the solar energy curve, has nonetheless lagged behind other states in terms of making solar a financial win for individuals who install solar systems.

All that changed on October 12 when California Governor Arnold Schwarzenegger signed two solar energy bills into law.

The first is AB 920, sponsored by Jared Huffman (D-San Rafael), which mandates that utility companies pay customers for an excess generation from their solar photovoltaic systems which they send back into the grid. Currently, 50,000 homes and businesses in California produce solar electricity. The law also applies to small wind.

The new law not only makes solar energy financially viable at the source, but encourages customers to conserve energy. Formerly, those who were producing solar electricity either had to use it all or give it back to the utilities for free at the end of a year.

Under the new law, opponents like Pacific Gas & Electric (PG&E) – who charge that the new law will be funded out of the pockets of those who can’t afford solar – will either have to refund customers in cash or allow the energy credits generated to be rolled over into the coming year.

The law goes into effect at the beginning of 2011, though the California Public Utilities Commission (PUC) still has to set the rate of compensation.

The second law, Senate Bill 32, creates a feed-in tariff that requires the state’s public utilities to pay for the electricity from small systems (1.5 to 3 megawatts) at rates above what they pay to buy wholesale power.

California’s current renewable portfolio standard, or RPS, calls for 33 percent (of electricity production from renewable energy sources) by 2020. These two new laws – signed at the tag-end of the 2009 legislative session – have opponents crying foul, charging that the governor delayed to divert opposition, but the California Solar Energy Industries Association and various green groups are smiling ear to ear.

Hopefully, the PUC will have the foresight to tag the rate to increasing solar installations, as Gainesville, Florida did, offering 32 cents per kilowatt hour the first year and decreasing thereafter, with contracts fixing rates for 20 years.