BILL ANALYSIS
AB 2296
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Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2296 (Saldana) - As Introduced: February 18, 2010
SUBJECT : Energy: solar energy systems.
SUMMARY : Allows a solar energy system that is located on a
near-site location to the end-use customer, to be eligible for
ratepayer-funded incentives from the California Solar Initiative
(CSI).
EXISTING LAW :
1)Establishes the CSI, which provides $3.3 billion in
ratepayer-funded incentives with the following goals:
a) Install 3,000 megawatts (MW) equivalent generation
capacity of solar photovoltaic (PV) panels.
b) Establish a self-sufficient solar industry in which
solar energy systems are a viable mainstream option for
both homes and businesses in 10 years.
c) Place solar energy systems on 50% of new homes in 13
years.
2)The CSI requires the California Energy Commission (CEC), in
consultation with the California Public Utilities Commission
(CPUC) and others, to establish eligibility criteria for solar
energy systems receiving ratepayer funded incentives that
include the following:
a) The solar energy system is intended primarily to offset
part or all of the consumer's own electricity demand.
b) The solar energy system is located on the same premises
of the end-use consumer where the consumer's own
electricity demand is located.
3)Requires the CEC to adopt guidelines for solar energy systems
receiving ratepayer funded incentives at a publicly noticed
meeting offering all interested parties an opportunity to
comment.
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FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to allow a resident, commercial establishment, or owner of a
multi-family dwelling to place a solar energy system near his or
her principal location, and be eligible for CSI rebates. Some
multi-family dwellings may not be optimal for solar installation
directly on its roof-top. By allowing near-site application,
this may expand the use of solar to generate electricity for
multi-family dwellings with land that is close by that may be
more conducive to electricity generation.
1) The CSI : SB 1 (Murray), Chapter 132, Statutes of 2006,
created the CSI with the goal of installing 3,000 MW of solar PV
in California within 10 years. Another goal is to establish a
self-sufficient solar industry. In response to concerns that a
few well-positioned applicants would deplete the funds and
impede growth of solar as a self-sustaining industry, SB 1
limits the size of the solar energy system to not more than 1
MW.
Since the early 1980s, California has installed a cumulative
total of 441 MW of grid-tied solar PV statewide. More than a
third of those MW were added in 2008 alone, largely as a result
of the CSI. In 2008, the CSI installed 133 MW of grid-tied
distributed solar PV capacity in the service territories of the
three largest investor-owned utilities (IOUs).
The CPUC reports that the CSI remains roughly on target to meet
the state's IOU goal of 1,750 MW installed by 2017. (The
statewide goal is 3,000 MW. The IOU portion of the goal is
1,750 MW; the New Homes Solar Programs, which is run by the CEC,
is responsible for 400 MW; and, the publicly owned utilities are
responsible for the rest.) Although each utility territory is
progressing at different rates, the 322 MW both installed and in
the pipeline represent 18 percent of the total program's goal of
1,750 MW. After just two years in a ten-year program, at 20
percent complete, the CSI program appears to be roughly on track
to meet its goal by 2017.
2) How the eligibility criteria were established : The CEC and
CPUC developed the program rules for the California Solar
Initiative through a public rulemaking process. Among the major
policy decisions made by the CPUC's rulemaking were how to
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organize and adjust the incentive levels, how to provide
performance based incentives, and how to require metering.
3) What is "near-site" : This bill does not define "near-site."
Public Utilities Code Section 2827.9 provides net-energy
metering for an eligible biogas digester customer-generators
(manure- methane fueled generation) and allows the electrical
generating facility to be located "on or adjacent to the
customer's owned, leased, or rented premises?." and includes
other criteria. This committee may wish to use the same
definition for "near-site."
4) Current demand : According to the CPUC, the rate of
installations is expected to remain strong in 2009 because
demand for incentives under the CSI surged in the fourth quarter
of 2008, breaking the previous records for most applications in
a single quarter and most applications in a single month. The
CSI received 3,590 applications for new projects in the quarter
spanning October, November, and December of 2008, breaking the
record for new applications set in the previous quarter by
nearly 20 percent. The CSI also set a new record for
applications received in a single month, with December bringing
in more than 1,300 applications for new projects.
5) The rebates : To date, the CSI has paid or reserved nearly
$775 million in incentives for total estimated project costs
totaling over $5 billion. The CSI offers financial incentives
for solar installations based on the expected performance of a
given solar installation. The expected performance is derived
from the size of the solar array, and also takes into
consideration the angle and location of the system installation.
For larger systems, the incentive is based on the actual
performance of the system over the first five years.
The incentive level available to a given project is determined
by currently available incentive in each utility territory for
each customer class. The CSI was designed so that the incentive
level decreases over ten steps, after which it goes to $0 as the
total demand for solar energy systems grows.
The CPUC divided the overall goal of 1,750 megawatts by the ten
declining steps. Each step has megawatts allocated to each
Program Administrator and customer class, residential and
non-residential (a combination of commercial and
government/non-profit). Once the total number of megawatts for
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each step is reached within a particular customer class, the
Program Administrator moves to the next step and offers a lower
incentive level for that class. Therefore, high commercial
demand in SCE's territory will not lower the incentive level
offered to PG&E's residential customers, and so on.
6) Pros and cons : The proponents of this bill state that, by
allowing near-site solar energy systems to be eligible for
subsidies, the owner of a system can site the system in an
optimal location to generate the most electricity for the panel.
The solar panels would not be confined to a singular rooftop and
could possibly generate more renewable electricity to send back
to the grid.
On the other hand, there is a concern that if the pool of
eligible technologies opens up, the funds could be depleted
sooner than expected and won't last the entire 10 years. The
net-metering cap for each service territory could also be
reached sooner than anticipated. The intent of SB 1 was to make
it a 10-year program. Had the author of SB 1 anticipated
increased eligibility, he may have changed other parameters to
ensure a robust market had evolved by the time the subsidies
wane. In addition, one of the intended outcomes of SB 1 was to
alleviate the need for additional infrastructure that must
accompany off-site electric generation; hence the phrase, "a
million solar roofs."
7) The benefits of solar, net-energy metering : At any time of
the day, the solar energy system will produce more or less
electricity than the home or business needs. To allow for net
energy metering, a bi-directional meter measures the electricity
flowing into and out of the home or business. For example, when
the solar generating system produces more electricity than the
home or business uses, the "excess" electricity automatically
passes through the meter and onto the utility grid. When this
occurs, the meter runs backward and it generates a bill credit
for the full retail value of the electricity the system is
producing at that time. At times when the system-owner's
electricity demand is higher than the solar system produces, the
home or business uses electricity supplied by the utility. Over
a 12-month period, customers on net energy metering will pay for
the net amount of electricity used from their utility over and
above the amount of electricity their solar systems generate (in
addition to monthly nongeneration charges incurred).
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Net energy metering for residential and business customers can
only apply when the solar energy system is located on the same
premises of the meter it is off-setting. This bill does not
address whether or how a "near-site" solar energy system would
off-set electricity consumption at a different location. There
exist a few programs that have attempted to allow an off-site
energy generation system to defray the amount of energy consumed
at a different location.
AB 2466 (Laird), Chapter 540, Statutes of 2008, authorizes a
local governmental entity to receive a bill credit against
electricity it has consumed from an electric corporation for
electricity it supplied to the electric grid from a renewable
generating facility. AB 1031 (Blumenfield), Chapter 380,
Statutes of 2009, expanded the AB 2466 program to apply to
college campuses.
AB 2466 requires the CPUC to adopt a rate tariff for the
benefiting account(s).
SB 2573 (Leno), Chapter 786, Statutes of 2006, requires PG&E to
offset power generated by San Francisco's Hetch Hetchy Water and
Power (HHWP) solar facilities, with HHWP municipal customers at
a different location. SB 581 (Leno), Chapter 598, Statutes of
2009, updated SB 2573 to allow all renewable facilities to be
eligible for the HHWP off-set.
SB 2573 requires PG&E to credit HHWP at a rate designated by a
specific Interconnection Agreement, which identifies the terms
and conditions for PG&E to "wheel" HHWP electricity to San
Francisco PUC municipal accounts.
8) Would a feed-in tariff be a better deal : A feed-in tariff
(FIT) is an obligation that utilities purchase all the
electrical output from specified generators under a standard
contract with the price and terms determined by statute or a
regulatory agency. Renewable FITs can help promote the
development of renewable generation by reducing transaction
costs and financing costs for renewable developers since the
terms of the agreement are known ahead of time and will not
change over the life the project. FITs can also act as a
subsidy to help promote more expensive renewable technologies if
the price paid to the generator is set at a rate that is higher
than what the utility would pay for other generation.
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In 2006, AB 1969 (Yee), Chapter 731, Statutes of 2006, created a
FIT by mandating that IOUs purchase all electricity generated
from renewable facilities that are owned by water and waste
water agencies that are smaller than one MW in size at specified
rates set by PUC. When PUC adopted the final rules necessary to
implement AB 1969, it expanded the eligibility of the AB 1969
program to allow ANY customer to take part of FIT and to allow
for renewable generators up to 1.5 MWs in size. This program
has been referred to as "the AB 1969 program."
The rate paid under the AB 1969 program is the market price
referent (MPR). MPR represents a calculation performed by the
CPUC on an annual basis to determine the market cost of power
from natural gas facilities. The calculation is used to
determine the above market cost of contracts signed under
renewable portfolio standard.
Last year, SB 32 (Negrete McLeod) Chapter 328, Statutes of 2009,
expanded the feed-in tariff program to allow for renewable
resources that are sized up to 3 MW to qualify. In addition, SB
32 provides that the price paid by the investor-owned utilities
(IOUs) for electricity purchased under this program shall be a
price determined by the CPUC that reflects the cost of
fossil-fuel generation in the state and the value of
environmental compliance costs, and so that ratepayers who do
not receive the payments under this program are indifferent to
the tariff rate paid to the generators.
SB 32 afforded renewable generators expedited interconnection
procedures to eligible generation facilities that are located on
a distribution circuit that generates electricity at a time and
in a manner so as to offset peak demand on the distribution
circuit. It also allows the utilities to decline new FIT
applications once the utility meets its proportionate share of a
statewide total capacity cap of 750 MWs, or until each utility
has reached the caps on above-market cost under the California
Renewables Portfolio Standard.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
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Pacific Gas and Electric Company (PG&E)
The Utility Reform Network (TURN)
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083