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By Michael Kanellos

Why is solar growing faster in Northern California than in Southern California, arguably a more amenable climate for solar? While political and social factors are often cited, part of the explanation lies in accounting too.

Pacific Gas & Electric (NYSE:PCG), the big utility in the North, rates the size of a solar panel installation by the capacity of the inverter, the electrical box that converts DC from the panels into household AC, said Chuck Hornbrook, senior manager of PG&E's solar and customer generation group, during a lunch meeting sponsored by the organizers of Intersolar North America, a solar trade show taking place in San Francisco the week of July 13. Southern California Edison uses a state-sponsored formula tied closer to the actual output of the panels.

In solar installations, the inverter capacity is invariably larger than the actual potential output. As a result, PG&E's measure of a solar system output is about 13 percent higher than what other utilities would rate the same solar system, he said.

In turn, the utility is hitting caps for rebates and other ceilings more rapidly.

"They overestimate the amount of capacity," said Adam Browning, executive director of the Vote Solar Initiative. He was surprised to learn of the accounting nuance. Fair enough. The accounting system goes back to the early days of PG&E's solar experience, Hornbrook stated, and it's not widely advertised. The utility is looking at ways to change it.

While the debate sounds arcane, it has an impact. Right now, utilities are only allowed to obtain 2.5 percent of their power from small power providers, like homes with solar panels on the roof, through net metering. PG&E is close to the cap and others are coming up to it as well. Although some legislators have proposed lifting the cap to ten percent, the status quo could put a huge dent in demand. A change in inverter accounting, of course, would help ease off some of the pressure.

And make no mistake: solar panel makers are watching those numbers.

"Our biggest priority is net metering," said Polly Shaw, director of external relations at Suntech Power Holdings, the large Chinese solar panel manufacturer.

In any event, you can see how far the North is ahead by looking at where they are on the rebate table. PG&E residential customers, for instance, right now qualify for stage 5 rebate rates of $1.55 per watt. After 10.4 more megawatts are installed in PG&E territory, the rebate will drop to stage 6, or $1.10 a watt. SCE customers can still qualify for stage 4 rebates of $1.90 a watt and it won't drop to the $1.55 level until around 19.7 megawatts are installed. A similar situation exists for commercial customers: PG&E customers are in stage 6 while SCE customers can still get stage 5 rebates.

Policy will be one of the big issues at the nearly week-long conference. It is the U.S. version of a German trade show that recently took place in Munich. (Disclosure, Greentech Media will be one of several companies speaking and participating in the show.)

Some of the other comments and issues from the luncheon:

--China and California both seem destined to raise their renewable energy portfolio standards. China, which calls an RPS mandatory market share, is considering a standard that would mandate that 15 percent of its power comes from renewable sources, said Shaw. The country's goal is to get 1.8 gigawatts from solar by 2020 but it could be raised to 10 gigawatts to 20 gigawatts, she added, depending on electrical power consumption and the growth of local solar manufacturing.

"You are seeing significant attention given to solar policy in China," she said. "You will see a massive market start up."

Chinese companies, of course, see solar panels as a huge growth market. China is already a dominant player in solar thermal systems. There's even a company called God Bless Solar in China. (Additionally, the government continues to tweak building codes that will also increase solar demand.)

California, meanwhile, seems destined to officially raise its RPS goals to getting 33 percent of its power from renewable by 2020. Browning for his part added that his organzation advocates feed-in tariffs, which would allow California consumers to sell power the grid, be implemented in the state, but with market provisions so that the tariff could float with market conditions.

--The German market for renewables will also continue to grow, added Gerhard Stryi-Hipp, Head of Energy Policy at Fraunhofer Institut for Solar Energy Systems ISE. Germany's goal is to get to 30 percent renewables by 2030. Right now, Germany actually only gets a little over one percent of its energy from solar, he stated. (In Bavaria, it is closer to 3 percent.)

So how will Germany get to 30 percent? "Wind will be a major part of it," he said. Solar may only account for 7 percent to 12 percent of the total electrical capacity.

--And are we close to grid parity? In Italy and Denmark, renewables are close, the various speakers said, and other parts of the world are gaining.

Source: Is PG&E Overestimating the Amount of Solar?