BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 1923 Hearing Date: 6/21/2016
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|Author: |Wood |
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|Version: |6/2/2016 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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SUBJECT: Bioenergy feed-in tariff
DIGEST: This bill increases, from three megawatts (MW) to five
MW, the limit on the capacity of a bioenergy electric generation
facility that may participate in the investor-owned utilities'
(IOU) bioenergy feed-in-tariff programs.
ANALYSIS:
Existing law:
1)Requires all investor-owned utilities (IOUs) and publicly
owned utilities (POUs) that serve more than 75,000 retail
customers, to develop a standard contract or tariff (aka
feed-in-tariff or FIT) available for renewable energy
facilities up to three MW. Statewide participation is capped
at 750 MW. (Public Utilities Code §§399.20 and 387.8)
2)Requires IOUs to offer FITs for facilities up to three MW,
capped at 250 MW statewide and allocated as follows:
a) For biogas from wastewater treatment, municipal organic
waste diversion, food processing, and codigestion, 110 MW.
b) For dairy and other agricultural bioenergy, 90 MW.
c) For bioenergy using byproducts of sustainable forest
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management, 50 MW. Allocations under this category shall be
determined based on the proportion of bioenergy that
sustainable forest management providers derive from
sustainable forest management in fire threat treatment
areas, as designated by the Department of Forestry and Fire
Protection. (Public Utilities Code §399.20)
3)Directs the electrical corporations to develop standard
contract terms and conditions that reflect the operational
characteristics of the projects, and to provide a streamlined
contracting process. (Public Utilities Code §399.20)
4)Counts renewable energy generation FIT contracts to qualify
for credit toward and IOUs Renewable Portfolio Standard (RPS)
goals and resource adequacy requirements. (Public Utilities
Code §399.20)
This bill:
1)Increases, from three MW to five MW, the limit on the
nameplate capacity of a bioenergy electric generation facility
that may participate in the IOU's bioenergy FIT programs.
2)Conditions the exception described in 1), as follows:
a) The bioenergy electric generation facility delivers
no more than three MW to the grid at any time.
b) It complies with the IOU's Electric Rule 21 tariff
or other distribution access tariff.
c) Payment is made pursuant to FIT program rules and no
payment is made for any electricity delivered to the grid
in excess of three MW at any time.
Background
Feed-in tariffs and California's bioenergy feed-in tariff, in
particular. According to the National Renewable Energy
Laboratory (NREL), a FIT offers a guarantee of payments to
renewable energy developers for the electricity they produce.
NREL reports that FITs are used in many U.S. states and around
AB 1923 (Wood) PageC of?
the world.<1>
California, too, offers a FIT program to renewable resources.
In 2006, legislation<2> authorized the state's first FIT
program, which authorized the state's largest IOU's to purchase
up to 480 MW of renewable generating capacity from renewable
facilities with an "effective capacity" of not more than 1.5 MW.
The FIT program set the price paid to small generators, on a
first-come, first-served basis, at a price comparable to the
price of electricity generated using natural gas plus the value
of some environmental attributes.
Legislation expanded the state's FIT program in 2009.<3> First,
the program limit was increased from 480 MW to 750 MW. Second,
the cap on the size of an electric generation facility eligible
to participate in the FIT program was increased from 1.5 MW
effective capacity to three MW effective capacity. This bill
notes that the Legislature finds and declares that small
projects of less than three MW that are otherwise eligible
renewable energy resources may face difficulties in
participating in competitive solicitations under the RPS
program.
Bioenergy FIT. Subsequent legislation<4> further modified the
FIT program to require an additional 250 MW of renewable FIT
procurement from small-scale bioenergy projects that commence
operation on or after June 1, 2013. The modified program, known
as the bioenergy FIT program, requires the IOUs to each procure
set amounts, in MW, of generation from each of three categories
of bioenergy:
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<1>
http://www.nrel.gov/tech_deployment/state_local_governments/basic
s_tariffs.html.
<2> AB 1969 (Yee), Chapter 731, Statutes of 2006.
<3> SB 32 (Negrete-McLeod), Chapter 328, Statutes of 2009.
<4> SB 1112 (Rubio) Chapter 612, Statutes of 2012.
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Biogas from wastewater treatment, municipal organic
waste diversion, food processing, and codigestion - 110 MW.
Dairy and other agricultural bioenergy - 90 MW.
Bioenergy using byproducts of sustainable forest
management - 50 MW.
The bioenergy FIT program has just begun. The California Public
Utilities Commission (CPUC) approved the IOU's program tariffs
and other rules in September of 2015.<5> Nonetheless, program
participation to date has been anemic: the CPUC reports that,
to date, only one bioenergy FIT contract has been signed, it for
two MW of power generated from an eligible facility using
biogas.
Is this really a fix? This bill proposes a minor modification
to the bioenergy FIT program. Specifically, it increases, from
three MW to five MW, the limit on the nameplate capacity of a
bioenergy electric generation facility that may participate in
the IOU's bioenergy FIT programs, so long as it delivers no more
than three MW to the grid at any time. It is questionable how
much this will help the bioenergy FIT program. Bill proponents
contend that biomass generators with a nameplate capacity of
less than five MW are uncommon and expensive to purchase. That
may be case; while bill proponents have not substantiated their
assertions, the thus-far very low level of program participation
does not contradict their claim. And this bill's proposed
statutory change seems harmless enough. Still, it is doubtful
there are many bioenergy generating facilities with a nameplate
generating capacity of not more than five MW that will never
export more than three MW of energy to the grid. And, according
to the CPUC, there are few practical ways to ensure a facility
does not export electricity to the grid above an arbitrary,
below-nameplate amount, and certainly no ways to do so that are
not costly. Of course, any such cost would add to a project's
overall costs, thereby counteracting the intent of bill.
It may be that the bioenergy FIT program needs more of a fix
than the one offered by this bill.
Effective capacity versus nameplate capacity. As described
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<5> See CPUC Decision 14-12-081.
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above, existing statute limits participation in the FIT program
to electric generation facilities with and "effective capacity"
of three MW. This bill conditionally expands the bioenergy FIT
program limit from three MW "effective capacity" to five MW
"nameplate capacity." So, what's the difference between
effective capacity and nameplate capacity? The practical
answer: there is none. The CPUC determined, in Decision
12-05-035, that the three-MW limitation corresponds to the
nameplate capacity of the facility, meaning the capacity stamped
on the metal nameplate attached to the generation facility by
the manufacturer.
Prior/Related Legislation
AB 1969 (Yee, Chapter 731, Statutes of 2006) authorized the
state's first FIT program, which authorized the state's largest
IOU's to purchase up to 480 MW of renewable generating capacity
from renewable facilities with an effective capacity of not more
than 1.5 MW.
SB 32 (Negrete-McLeod, Chapter 328, Statutes of 2009) increased
the FIT program limit from 480 MW to 750 MW and increased from
1.5 MW effective capacity to three MW effective capacity the
limit on electric generating facilities eligible to participate
in the FIT program.
SB 1112 (Rubio, Chapter 612, Statutes of 2012) required an
additional 250 MW of renewable FIT procurement from small-scale
bioenergy projects that commence operation on or after June 1,
2013.
AB 1979 (Bigelow, 2016) would make an exception to the FIT
program three-MW limit on the generating capacity of an eligible
electric generation facility to newly allow participation by a
conduit hydroelectric facility with a nameplate generating
capacity of up to four MW that meets certain conditions. The
bill is pending consideration by this committee.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
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SUPPORT:
Humbolt County Board of Supervisors (Source)
Association of California Water Agencies
Calaveras County Water District, if amended
City of Fortuna
League of California Cities Redwood Empire Division
NLine Energy, Inc.
Sierra Institute for Community and Environment
The Watershed Research and Training Center
Several Individual
OPPOSITION:
Pacific Gas and Electric Company (prior version)
West Biofuels
ARGUMENTS IN SUPPORT: According to the author:
Current regulations make it cost-prohibitive to invest in
this renewable energy [biomass energy]. Generators under
five MW, in particular three-MW generators, are not common
and extremely expensive to purchase. AB 1923 allows
electric generation facilities to be eligible for the
renewable feed-in tariff if it has a nameplate generating
capacity of up to five MWs, if it runs at a maximum of
three MW. This will allow small sawmill investors to
purchase affordable, used five MW generators and export
energy at three MW.
ARGUMENTS IN OPPOSITION: According to the opponents, this
bill is intended to expand the Biomass Market Adjusting Tariff
program to allow for more projects to participate and to lower
the overall cost of the program, but as written, will not
accomplish these goals and will actively hinder the success of
the program.
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