Palo Alto city to pay double wholesale market price for solar energy contracts

Dive Brief:

The Palo Alto City Council approved 6-1 to renew a city pilot program that ensures its municipal utility pays about $0.16/kWh for power purchase agreements for solar energy exported to the grid, or double the market rate ($0.07/kWh) the city pays for wholesale solar energy, the San Jose Mercuary News reports.
The Council's Finance Committee pushed to reduce the amount under the Palo Alto CLEAN (Clean Local Energy Accessible Now) pilot program to about $0.08/kWh instead, pointing to recent dips in wholesale prices for solar energy.
At present, the program aims to get 4% of the city's power from locally-sourced solar generation, and costs customers under Palo Alto Municipal Utilities an additional monthly $0.09/kWh on thier bills.

Dive Insight:

Cities across the United States are searching for ways to procure more renewable energy for their residents, some cities, like Palo Alto, are wrestling with how much to pay for power purchase contracts while incentivizing renewable energy development. The conumdrum here is a city trying to buy locally sourced solar energy.

A need to tighten city finances invited more scrutiny of the solar pilot program, which now powers about 1% of Palo Alto's electricity. One member of the council called the solar pilot’s benefits "tenuous" and questioned the practicality of its roughly $380,000 annual premium over the cost of buying wholesale solar.

"The Finance Committee didn't say the city should stop buying solar energy. ... It's tremendous that in some parts of the state solar is at a price more advantageous than even fossil fuel," said Councilman Eric Filseth, who had questioned the program. "But local solar is a challenging argument to make because we're talking about such a tiny fraction of the city's power. The pilot program amounts to less than 1 percent of the city's needs."

Proponents said this program will open up the commerical market for solar energy in the city, the news outlet reported. Other cities pushing for more renewable energy in California include San Diego, which recently approved a Climate Action Plan that aims to run on 100% renewable energy and reduce greenhouse gas emissions 50% by 2035.