A new approach to providing grid-parity to renewable power is coming online in California. This is a welcome advancement in government policy to renewable power supplies, in this instance solar power. The California Public Utility Commission will initiate a bid process for small scale developers to install the solar plants at the lowest cost the developers believe they can attain.
The greatest element of this project is that it reduces the prominence of government market meddling. While renewable power sources require subsidies to be competitive for a variety of the reasons, the introduction of market forces into the development process of renewable power supplies is a much welcomed addition to remove government imposed pricing. The cleantech blog here, http://www.cleantechblog.com/2010/03/state-of-california-feed-in-tariff.html, provides more detail about government subsidies for renewable power sources and their causes, namely that fossil fuel extraction costs are subsidized.
The timing of this initiative is excellent with California looking for new methods and aligning incentives of various parties to meet the aggressive RPS measures for the state to generate 20% of its power from renewable sources. For California, this is another instance of their leadership to develop renewable power and an attempt to lower the cost of the solar installation and introduce market forces through a bidding process.
In the end, this is going to be a real win for consumers because the cost is solar is coming down but also the cost-savings realized through a competitive bid process. This bid process also avoids attempts by the CPUC to predict markets and set future prices for renewable power that down the road could be horribly out of line providing either a gross disincentive to develop solar or a political problem where the taxpayer is getting gouged to support renewable power.
I am looking forward to watching the development of this particular California proposal and hope that it works. Introducing market forces to the renewable development space will provide benefits through the competition. While grid-parity for renewable power sources, employing capitalism in this space will open the door for people to realize an incentive and be able to predict with some certainty the reward they may potentially gain.