Is California trying to kill the community-scale generation market?


California, long a progressive leader on renewable energy and climate change mitigation, has neglected a key market segment for renewable energy: the community-scale or wholesale distributed generation market.

The wholesale distributed generation segment consists of projects below 20 megawatts that connect to the distribution grid and export power to the grid for sale.

These kinds of projects are large enough to make a difference to the state’s ambitious climate change and renewable energy mandates, but also enjoy low costs and much lower environmental impacts than projects bigger than 20 megawatts, the latter being the historical default in California for meeting state renewable energy goals.

For example, a five-megawatt solar project occupies about 30 acres of land and can be located closer to load in urban pockets, on already-disturbed land, or on large buildings and parking lots. The largest-scale solar projects have much greater environmental and grid impacts. For example, the 550-megawatt Topaz Solar Farm in San Luis Obispo County occupies over seven square miles of land and is located far from the load centers where power is consumed.

There is an increasing pushback on large-scale solar and wind power, due to their large impacts. For example, San Bernardino County, California’s largest county and the focus of much solar power development, has passed new rules that would severely restrict large-scale solar developments on private land, but would allow “community-oriented renewable energy.”

Similar restrictions are increasingly being applied in other counties and for federal lands in California, such as the Desert Renewable Energy Conservation Plan completed in 2016, which has had the effect of stifling new large-scale solar and wind power projects in favor of conservation of natural habitats.

In short, community-scale renewables enjoy the cost advantages of much larger projects without much of the environmental impacts or need for new transmission lines and associated costs. The community-scale market segment combines the benefits of the small-scale and utility-scale market segments, without the downsides.

Unfortunately, most of California’s programs targeting this key market segment have struggled or failed. Since the 1990s this market segment has been a modern Cinderella waiting for its prince.

This disparity has come about because California’s energy policy is dumbbell-shaped, with strong support for small-scale and utility-scale renewables. In contrast, the community-scale market segment has been plagued by ongoing policy neglect, and otherwise poor policy choices.

The Green Power Institute (GPI), part of the nonprofit Pacific Institute, produced a 2019 report, A Modern Cinderella Story: Assessing the state of California’s “community-scale” renewable energy market. The report does a deep dive into the last decade of experience in California’s programs focused on wholesale distributed generation (“community-scale renewables”).

The following table from the report summarizes seven key wholesale DG procurement programs from the last decade and shows that most have largely failed, for various reasons:

It is not too late for this neglected market segment to find its prince. Will policymakers heed the track record of demonstrated failure and finally create new programs that address previous problems?

The Public Utilities Commission scoped what to do about the main community-scale power program, ReMAT, over two years ago. But still no action has been taken. Developers are leaving the state and looking for greener pastures.

It’s starting to look like the PUC and other policymakers are not just neglecting this segment, but may in fact be trying to kill it off. This is both bad policy and unfair to communities and developers who believed California’s rhetoric about the potential for community-scale energy. It’s time for the PUC to get off the dime and fix this program, and live up to the rhetoric.


Tam Hunt is a renewable energy lawyer and policy expert, owner and founder of Community Renewable Solutions LLC, and author of the book, Solar: Why Our Energy Future Is So Bright, soon to be released in its second edition.


The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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