Palo Alto advisers accept study recommending barrier reduction for local solar, storage; staff to update price inputs annually

Assistant Director for Climate Action Jonathan Ovenshyne presented a consultant study to the Palo Alto Utilities Advisory Commission on Dec. 3 assessing whether local flexible energy technologies — including solar plus batteries, vehicle‑to‑grid and demand response — can lower costs or defer grid upgrades and improve reliability.

The report concluded that, at the community level, residential installations of solar and storage generally do not deliver benefits that outweigh their costs, though large‑scale commercial solar plus storage came close to breakeven in the consultants’ modeling and commercial battery systems were near breakeven in some scenarios. “None of these technologies had benefits outweighing the cost,” Jonathan Ovenshyne said, noting the analysis excluded a separate time‑of‑use rate study that the utility is pursuing.

Staff recommended the city accept the consultant report, proceed with policies to reduce barriers to adoption (permit streamlining, technical assistance and outreach), and periodically update the cost‑benefit analysis. Commissioners debated an optional, more proactive alternative (identified as “2B” in the packet) that would fund a half‑time staff member to identify and clear barriers on an ongoing basis. Staff said the optional path would require resources to be proposed in the FY‑27 budget process.

Commissioners pressed staff on several points, including whether demand‑response programs exist (staff said Palo Alto has no active incentive‑based demand‑response program today and a past small commercial pilot was not cost‑effective), and whether a distributed resource program could defer distribution transformer or substation upgrades. The study focused on distribution‑level transformer deferral and found costs generally exceeded benefits; staff said substation transformer deferral and grid‑scale storage were not addressed in depth in this analysis and may warrant future review.

Several commissioners emphasized resilience and argued the consultant model understates the non‑monetized value of local backup resources in low‑probability, high‑impact events such as earthquakes or wildfire. Commissioner Metz urged a scenario‑based approach for long‑term emergency planning, and staff said those topics will be pursued further in 2026.

On a procedural motion, the commission voted to accept the staff recommendation with an amendment requiring that electricity price inputs in the cost‑benefit model be updated annually (rather than every two years for supply inputs). The commission asked staff to return to the council with any proposed budget for the optional, higher‑effort program (2B) if the city chooses to pursue it.

What happens next: The accepted recommendation — focused on outreach and barrier reduction and on keeping the cost‑benefit analysis up to date — will be presented to City Council. Any decision to hire staff or fund a proactive barrier‑reduction program will be considered through the FY‑27 budget process.

Quotes: “None of these technologies had benefits outweighing the cost,” Jonathan Ovenshyne said of the residential analysis. Commissioner Croft pushed for more frequent price updates to keep the model responsive to changing market conditions and moved the successful amendment to require annual electricity‑price updates.

Budget and staffing note: Staff said the optional alternative to pursue barrier removal more proactively would likely require a half‑time hourly position and associated communications support; the exact fiscal impact will be returned through the budget process.

The commission did not take immediate action to fund optional alternative 2B; the motion adopted the staff recommendation with the annual‑price‑update amendment and will go to council for consideration as appropriate.