Implications of California’s Solar PV Mandate

In a few years, all new California homes will generate clean energy with solar panels through newly-adopted building standards. In May, the California Energy Commission (CEC) approved a mandate for new homes to have solar photovoltaic (PV) systems in 2020. The 2019 Building Energy Efficiency Standards will effectively lessen greenhouse gas (GHG) emissions without greatly increasing construction costs, according to California Building Industry Association CEO and President Dan Dunmoyer.  
The 2019 standards also include new requirements for residential ventilation and insulation. To reduce energy bills, the building standards emphasize implementing battery storage and heat pump water heaters that use energy during off-peak hours. Non-residential building standards include new requirements for ventilation and lighting and, for the first time, applying these standards to healthcare facilities.   
With over 50 years of combined experience within the energy industry, OATI experts Dr. Ali Ipakchi and Dr. Farrokh Albuyeh offer their insights on and explore the implications of this mandate.
Dr. Farrokh Albuyeh: CEC Mandate Leads Grid Modernization Efforts in U.S.
For years, California has set the pace for the rest of the nation when it comes to environmental and energy efficiency issues; for example, the 2019 building standards are the first in the US requiring solar power for new constructions.
The recent Federal Energy Regulatory Commission (FERC) Order No. 841 removes barriers to electric storage participation by retail assets in the wholesale market and requires a participation model that accommodates to electric storage resources’ characteristics and furthers market competition (to learn what Dr. Ali Ipakchi’s takeaways were from Order 841, click here). When coupled with this order, the new building standards will influence and create opportunities for all segments of the electric power industry, Solar PV and electric battery manufacturing and deployment, and transportation.  
These impacts on the U.S economy and industry will be far greater than those of the Rural Electrification Act of 1936, which provided electrical power to rural areas and rejuvenated the entire nation. The additional costs for new construction will be far less than the potential long-term economical and societal gains.
In some respects, California may be following Europeans’ recent drive towards the de-carbonization of the electric and transportation industry by reducing greenhouse gas (GHG) emissions and becoming a leader in renewable energy consumption.
Dr. Ali Ipakchi : How Regulations Affect Utility Industry
Many countries have taken the Paris Agreement — which seeks to limit global temperature increases and ensure countries have the ability to effectively combat climate change — seriously with various initiatives poised to reduce carbon emissions, including increased adoption of renewable resources and electrification of transportation, among others.  This has led to increased demand and thus expansion of global production volumes of such resources as photovoltaic (PV) solar generation and battery energy storage systems (BESS). The resulting decline in the cost of these resources, coupled with regulatory incentives, is further accelerating adoption of these resources.
In some regions of the country, e.g., Hawaii and California, the elevated levels of PV generation is impacting the system load profiles and thus bulk power market prices, as CAISO has started experiencing negative clearing prices during mid-day periods (solar peak hours). When coupled with BESS, the renewable generation periods can be extended by charging batteries at solar peak periods and discharging them when the sun sets, and thus levelizing the load profiles. As the industry currently sees long term Power Purchase Agreements for large scale solar farms for less than $0.03/kWh (less than 3 cents), and less than $0.11/kWh for integrated solar/battery farms, the global trend for the adoption of these renewable resources will continue to accelerate.             
The regulatory requirements for seeking Non-Wires-Alternative (NWA) for transmission and distribution expansion projects is gaining interest, in part due to favorable NWA economics.  As an example, the cancelation of BPA’s Interstate 5 Corridor transmission upgrade project was in part due to the impact of solar generation on California load profiles, as well as availability of NWA resources to relieve potential congestion on the transmission segment.    
About the Author
Dr. Farrokh Albuyeh is Senior Vice President of Smart Grid Projects at OATI. He is involved in the development and delivery of solutions and services for wholesale energy markets, applications for scheduling and management of Demand Response (DR) and Distributed Energy Resources (DERs), as well as the development and delivery solutions in support of distribution grid renovation. He has specific experience with technical analytical studies, application software development, providing consulting services, managing, and delivery of large-scale projects.
About the Author
As the Executive Vice President Smart Grid and Green Power at OATI, Dr. Ali Ipakchi is responsible for product development and business growth in Distribution Grid Modernization and Smart Grid areas. He has led several new business-lines and corporate development initiatives in response to changing power industry requirements while managing product development and solutions delivery teams. Dr. Ipakchi is co-holder of several U.S. patents on power systems, and instrument diagnostics.