A diamond in the deregulation rough

California’s power crisis has proved to be fertile soil for a new crop of small wind turbines seen sprouting across the state. From Chico in the north to Temecula in the south, from the coast near San Luis Obispo to windswept Tehachapi, small wind turbines are rising on their spindly towers to sweep kilowatt-hours out of the sky.

Increasing numbers of adventurous homeowners are taking the costly plunge, spurred on by a two-year-old state program to encourage consumers to generate some of their own power using the sun and wind.

They plunk down from $15,000 to $35,000, some in the hope of simply cutting rising electricity bills, others to keep the lights on if the threatened rolling blackouts become a reality.

Once mocked as modern day Don Quixotes, the windmillers of the new millennium now appear prescient. Most, such as Yolo County resident Stephen Black, have done their homework. They understand how their solar panels and their wind turbines work together in what experts call a “hybrid” power system. They also recognized an attractive deal when they saw one and have tapped into California’s solar “buy-down” program.

Buying down
As part of California’s controversial electric utility restructuring, the Legislature entrusted the California Energy Commission with $54 million for supporting the development of “emerging” renewable energy technologies, such as photovoltaic panels and small wind turbines. They hoped the subsidy would lower manufacturing costs by increasing volume.

The program paid up to $3,000 per kilowatt (raised to $4,500 per kW in May, 2001), or 50 percent of the installed cost, whichever is less. The actual amount varies from one site to the next, depending upon the components used in each home power system.

Black installed his hybrid power system for about $25,000 and received $8,800 back from the Energy Commission. San Luis Obispo resident Jim Davis and his wife Shelley paid $22,000 for their system and received a rebate of $6,000.

About 400 solar systems have been installed under the “buy-down” program in the two years the program has been in effect, said California Energy Commission staffer Sandy Miller. That number is sure to increase amid the current energy chaos.

The buy-down program has grown steadily and Miller is optimistic that applications will skyrocket in the wake of publicity surrounding the state’s power crisis: “Since this past summer, more and more people are looking for alternative sources of power and their two main choices are photovoltaics [solar cells] and small wind turbines.”

Powering up
According to Miller, the buy-down program is open to any customer of Pacific Gas & Electric, Southern California Edison, or San Diego Gas & Electric. The equipment used must meet state and utility standards and the installers must obtain all necessary local permits.

Since the state designed the buy-down program to boost sales of small home-power systems, applicants must produce no more than 125 percent of their annual electrical consumption. For example, if the typical California household consumes about 7,000 kilowatt-hours per year, they could generate as much as 8,750 kilowatt-hours yearly from wind and solar energy.

Most hybrid power systems are designed to produce less than that. The Davises estimate that their system produces from one-half to two-thirds of their electricity, most from their solar panels. But some, such as Jonathan Herr near Santa Rosa in Sonoma County, produce nearly all the power they need. Herr, a landscape architect who works from home, cut the PG&E bill for his all-electric home this past fall to $4 per month.

The program is restricted to solar and wind systems that are connected to the utility’s power lines. Since the funds for “emerging renewables” were drawn from the state’s utility deregulation, they only apply to customers of the deregulated utilities, not those living “off-the-grid.” This restriction also requires participants to take advantage of California’s new “net metering” law.

Net metering
The idea is simple. When the sun is shining brightly or the wind is howling and the hybrid power system produces more electricity than is needed, the surplus flows back to the utility company. This surplus is then banked with the utility.

When consumption is greater than production, on a cloudy day for example, and the Davises use more electricity than they are producing, they draw electricity from their account with Pacific Gas & Electric Co. If they have exhausted any surplus previously banked, the Davises pay for electricity as before.

No electricity is actually stored with the utility. Net metering is simply an accounting system that tracks how much is consumed and how much is produced. This simplifies tracking electricity exchanges between the consumer and the electric company.

Though some households with either solar panels or small wind turbines use electronic inverters that connect directly with the utility’s lines, all hybrid systems—those that use a mix of wind and solar—include batteries. This adds to the cost, but provides an added benefit: an uninterruptible power supply.

When Herr’s $35,000 hybrid system produces more power than his family can consume, excess power first recharges his batteries. Once the batteries are topped up, surplus electricity flows to PG&E, which can use every kilowatt-hour.

Should utility power fail, for example during a severe storm, the batteries take over automatically and power Herr’s home and office. “We’re the last pole along a ridge and when power went out a few years ago it took PG&E nearly two weeks to bring it back,” says Herr.

Deregulation’s wake
Today, it’s more likely that Herr’s power system will take over during rolling blackouts than during natural disasters. “I am really glad I did it,” says Herr.

The Davises are too. Shelley feels more confident about their power supply than before. “Here in rural areas,” says Shelley, “there are occasional blackouts.” But since they installed their hybrid power system they are now so sure of their electricity supply that they’ve eliminated the surge protectors on their computers. “Our power system acts like a big surge protector, so we don’t need individual ones anymore.

Utilities often permit the use of the same kilowatt-hour meter used before the hybrid system was installed. Feeding electricity back into the grid through the existing meter simply runs the meter backwards. Though the utility can choose to install two new meters, the principle remains the same. One meter measures consumption, the second measures the amount banked with the utility.

Though wind turbines and solar cells have been in use for more than two decades, utility workers in some areas are still unsure of how to handle them. Some can’t believe their eyes when they see the kilowatt-hour meter run backwards.

While PG&E didn’t place any obstacles in Herr’s way, they gave their permission for the interconnection “grudgingly,” he says. He laughs about it now. “They first tried to talk me out of it, saying that rates were going to go down with deregulation.”

As billions of dollars pour into out-of-state generators from California utilities, more ratepayers may find the state’s little-known subsidy a silver lining to the dark storm that deregulation has become. They too may find that a hybrid power system makes sense as a hedge against the uncertain future of the state’s electricity supply.

“Once it’s paid off,” explains Jonathan Herr, “it’s free.”