BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 2724|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 2724
Author: Blumenfield (D), et al
Amended: 8/16/10 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 9-0, 6/29/10
AYES: Padilla, Dutton, Corbett, Florez, Kehoe, Lowenthal,
DeSaulnier, Simitian, Strickland
NO VOTE RECORDED: Cox, Wright
ASSEMBLY FLOOR : Not relevant
SUBJECT : Renewable energy resources
SOURCE : Author
DIGEST : This bill expands the California Solar
Initiative Program eligibility for any state agency for
incentive payments for facilities sized up to 5 megawatts
(MW) with a cap of 26 MW. This bill sunsets January 1,
2013.
ANALYSIS : In 2001, at the height of the energy crisis
the Legislature directed the Department of General Services
(DGS) to identify and retrofit state buildings to reduce
energy consumption or produce its own electrical generation
(ABX1 29, [Kehoe], Chapter 8, Statutes of 2001-02 1st Ex.
Session).
In 2004 the Governor issued a Green Building Executive
CONTINUED
AB 2724
Page
2
Order (S-20-04) directing state agencies to implement a
variety of actions to reduce electricity usage in state
buildings by 20 percent by 2015. These actions include the
retro-commissioning of existing state buildings to ensure
that energy intensive systems are operating optimally and
the implementation of cost-effective retrofits to achieve
even higher energy savings. The order also directs
agencies to reduce grid-based energy usage in its buildings
by 20 percent by 2015. The DGS, as the state's real estate
builder, planner, and manager, is spearheading the effort
in partnership with the Green Action Team, an inter-agency
group chaired by the Secretary of the State and Consumer
Services Agency.
Solar Generation on State Buildings . California state
agencies are using on-site renewable energy at a growing
number of facilities through the use of power purchase
agreements (PPAs). Under these public-private
partnerships, solar service providers finance, build and
operate the systems, while the customers pay only for the
electricity at prices equal to, or less than, utility
tariff rates. The PPA receives California Solar Initiative
(CSI) rebates and federal tax credits of 30 percent.
According to the DGS Renewable Energy Directory, 46 state
buildings have installed 13 MW of solar generation ranging
in size from five kilowatts to 1.6 MW. More than 8 MW is
in the planning stages at 17 state sites.
California Solar Initiative . Effective in 2007, the CSI
calls for the installation of 3,000 MW of new,
solar-produced electricity by 2016. Targeted expenditures
under the CSI, funded by ratepayers, are $3.3 billion over
ten years, distributed among three distinct program
components: IOUs, $2.167 million/1940 MW; New Solar Homes
Partnership, $400 million/360 MW; and POUs $784 million/700
MW.
California now has over 736 MW of solar PV in the
investor-owned utilities (IOU) territories at over 43,000
residential, commercial and governmental sites. This
includes installed generation and pending applications.
The POUs have installed 26 MW of generation at 7,712 sites
and the NHSP reports 7.8 MW of solar PV at 3,002 sites.
AB 2724
Page
3
All CSI programs combined, California has approximately
installed 770 MW of solar generation on the customer's side
of the meter - 27 percent of goal.
State government facilities are required to reduce their
grid based electricity purchases by 20 percent by 2017 and
greenhouse gas (GHG) emissions to 1990 levels by 2020 under
legislative and executive directives. While reducing
consumption is a key strategy, energy efficiency in and of
itself will not be sufficient to meet these reduction
goals.
Increasing use of renewable energy generation is among the
accepted and encouraged practices to contribute to achieve
these reductions. However, many state agencies do not have
the necessary funding to implement renewable energy
generating technologies. The state has successfully
employed third party financing through a power purchase
agreement at no cost to the state, but is limited in the
size of the renewable energy generating system implemented
under this public-private partnership, even if the state
host facility has a larger demand and energy usage profile.
Current law limits the state in maximizing renewable
electricity generation potential at existing state
facilities that are large consumers of electricity and have
sufficient real estate for large solar photovoltaic energy
generating systems. Third party financers are willing to
finance solar PV systems only to the extent that there are
available state solar incentives. In this case, the limit
is 1 megawatt, resulting in underserved load that is not
conducive to achieving the reduction goals.
State's Solar Plans . The DGS wants to utilize the FIT
previously authorized by the Legislature to increase the
amount of solar generation at state facilities. They note
that some properties such as prisons have very high
electrical load and a great deal of roof and ground space -
enough to accommodate the significant footprint of large
solar arrays of up to 5 MW.
Recent PPAs secured by the state have reduced electricity
AB 2724
Page
4
costs for those participating facilities by 20 percent to
40 percent over traditional electric service. The solar
installations are generally less than 1 MW on an individual
basis allowing the solar contractor to secure a rebate for
the full size of the installation. The DGS reports however
that the state cannot secure a PPA for these large
installations without additional incentive payments from
the CSI program and so they are proposing to allow the
state to receive rebates for installations sized up to 5
MW.
However, the DGS bases this report on anecdotal information
and has not attempted to take a large project out to bid.
Although a larger project may receive a proportionally
smaller rebate due to the 1 MW CSI cap, that is not a legal
barrier to the agreement. The inference is that the
project would not produce enough savings to the state in
its electric rates without the CSI rebate up to 5 MW.
Although the PPA can realize a savings as high as 40
percent, there appears to be enough room in the savings to
accommodate a proportional reduction in the CSI rebate.
Additionally, the cost of solar has come down significantly
in the past few years and as much as 50 percent in the last
year alone for installations in the range of 5 MW.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/3/10)
Department of General Services
OPPOSITION : (Verified 8/3/10)
California Public Utilities Commission (unless amended)
DLW:do 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****