BILL ANALYSIS
SB 82
Page 1
SENATE THIRD READING
SB 82 (Hancock)
As Amended September 4, 2009
Majority vote
SENATE VOTE : Vote not relevant
SUMMARY : Requires the Controller to establish a Solar School
Subaccount in the State Energy Conservation Assistance Account
to be used by the California Energy Commission (CEC) for loans
to schools for energy efficiency projects and for the
installation of solar energy systems.
EXISTING LAW :
1)Creates the California Solar Initiative (CSI), SB 1 (Murray),
Chapter 132, Statutes of 2006, which provides $3.3 billion in
declining rebates for all applicants who install solar energy
systems. The CSI provides schools a higher net-metering rate
for energy generated.
2)Establishes the Energy Conservation Assistance Account (ECAA)
to provide loans to schools, hospitals, public care
institutions, and local government entities to finance energy
conservation related projects.
3)Establishes the Local Jurisdiction Energy Assistance Account
(LJEA) as a separate account within the General Fund as a
depository for all money received from local jurisdictions
from loan repayments, for energy project assistance. Permits
the CEC to contract for project services including feasibility
analyses, project design, field evaluation, and operation and
training assistance.
4)Creates the Self Generation Incentive Program that provides
$125 million annually for the installation of commercial-sized
solar PV and wind systems.
FISCAL EFFECT : Unknown
COMMENTS : This bill may provide financial assistance for energy
efficiency measures and to place solar panels on schools.
1)California Energy Commission Programs available for solar on
schools: The state's energy policies over the past few years
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have endorsed retrofitting schools and providing financial
assistance for the application of a portfolio of energy
efficiency and self-generation measures, not exclusively a
singular technology such as solar. For example, the ECAA
provides loans for energy efficiency and conservation measures
and requires the facility to pay the loan off using its
savings derived from the energy efficiency applications. The
payback is pretty quick for less-expensive measures that
reduce energy consumption. These include replacing interior
and exterior incandescent light bulbs with more efficient
lamps, replacing mechanical thermostats with programmable
thermostats, and installing or replacing other gadgets that
automatically turn a system off when not in use.
Some of the larger more expensive items require a longer payback
period, such as upgrading heating ventilation and air
conditioning (HVAC) systems, installing co-generation,
combined heat and power systems that generate electricity and
use the waste heat to preheat swimming pool water, and other
large capital investments. Solar projects would also take a
little longer to pay back due to the large initial capital
outlay.
Of the four examples provided on the CEC internet site, the
average payback period is a little over 6 years. Because
taxpayers pay for schools and public buildings, policies have
encouraged the reduction of energy usage at schools and public
buildings. In fact, All Californians benefit by reducing the
amount of energy these facilities use, and promoting their
zero-net energy usage.
2)California Public Utilities Commission (PUC) programs for
solar on schools: The PUC requires the investor-owned
utilities (IOUs), which serve about two-thirds of California's
electricity customers, to collect a public goods surcharge to
fund energy efficiency; renewable energy; and, research,
development, and demonstration programs from January 1, 2002,
January 1, 2012. The surcharge is a nonbypassable element of
the local distribution service and is collected on the basis
of usage.
The Renewable energy portion was separated into three
subaccounts: existing, new, and emerging energy technology
systems. The accounts were administered by the CEC, and the
solar programs were funded at about $147 million per year from
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the "new" account. In 2006, SB 1 created the CSI which
obviated the need for a duplicative and much smaller CEC
program. The funds from the "new" account were transferred to
the PUC to compensate the utilities for above-market costs for
renewable energy contracts.
3)The CSI program available for solar on schools : The CSI
provides $3.3 billion over a 10-year period. The goal of the
CSI is to facilitate a self-sustaining solar energy market by
encouraging private-sector installations and precluding the
utilities from dominating the funds. The CSI is available to
all customers, including schools and nonprofits.
All schools within the investor-owned utility territory are
eligible to apply for these funds. The CSI directs the
municipal utilities to offer similar programs in their own
districts.
The CSI provides performance based incentives that reward
systems that generate the most megawatts of power. At least
50% of CSI rebate funds are expended on performance based
incentives. AB 1027 seeks to encourage the greatest number of
installations, "while effectively generating electricity."
For solar panels to provide a quicker pay-back period, the CSI
provides for a "net-metering" allowance that permits an
installer to sell unused power back to the utility. The CSI
establishes a net-metering program whereby electric customers
receive credits to their monthly electricity bills for up to
12 months for producing and placing electricity on the grid
via solar PV. Schools are provided a greater credit per
kilowatt hour to compensate the school for being ineligible
for the federal tax credits allowed for non-municipal solar
installers.
4)The California Alternative Energy and Advanced Transportation
Financing Authority financial assistance for solar on schools:
Last year, State Treasurer Bill Lockyer sponsored SB 1754
(Kehoe) Chapter 543, Statutes of 2008, to enable the Financing
Authority to reduce the cost of building on-site renewable
energy through the use of prepayment bonds. The State
Treasurer stated that he would like to substantially increase
the use of renewable energy by state agencies, as well as
public schools, through power purchase agreements (PPAs) and
prepayment bonds.
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PPAs can be used by public and private entities to finance the
construction of onsite renewable power generation. Under a
typical PPA, a private third party finances the up-front costs
of building the renewable energy generation facility through a
loan provided by a bank. The bank provides a loan to cover
the up-front financing for the project, and the energy company
will build and operate the renewable facility that provides
electricity to the building owner. The building owner, in
turn, promises to make specified payments for that power for a
certain number of years which pays off the loan, as well as
creates a profit stream for the energy company.
Recently, schools have started using PPAs for the installation
of solar photovoltaic panels under the California Solar
Initiative. The private third party can build the power
generation more economically than a public entity because it
can take advantage of federal tax credits, depreciation and
other incentives for businesses that don't extend to public
entities.
By using bonds to finance the solar energy projects, the costs
of capital are cheaper than a loan from a private bank. These
cost savings could lower the overall costs of a private
developer selling electricity to the school, which would
enable the school or public building to achieve a lower
monthly energy bill.
5)Other state benefits provided for solar on schools: A school
with solar generation is eligible for net-metering.
Net-metering allows excess energy generated to be sold back to
the utility at the customer's retail rate, which is
substantially higher than the wholesale rate at which the
utility normally procures electricity.
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083
FN: 0002994