Michael R. Peevey is the assigned Commissioner and Dorothy J. Duda is the assigned Administrative Law Judge to this portion of the proceeding.
1. The SGIP Handbook limits the scope of renewable fuels eligible for Level 2 incentives to those that are on-site.
2. In Resolution E-4193 regarding RPS, the Commission granted PG&E the ability to procure directed biogas from an out-of-state facility that creates the gas and injects it into the natural gas pipeline.
3. As stated in D.01-03-073, the intent of SGIP is to encourage deployment of DG to reduce peak electric demand, give preference to new renewable energy capacity, and ensure deployment of clean DG technologies.
4. Pub. Util. Code § 379.6(g) requires the Commission to pay an additional incentive of 20 percent for the installation of DG resources from a California supplier, as defined in that section.
5. Bloom filed its petition more than one year from the date of D.01-03-073 which it seeks to modify.
Conclusions of Law
1. Bloom's petition should be accepted for consideration because of recent changes regarding the availability of renewable fuels transported by pipeline.
2. Allowing directed biogas to qualify as a renewable fuel under SGIP is consistent with treatment of biogas in the RPS program and has the potential to increase participation in SGIP by renewable fuel technologies, increase the amount of electricity produced by renewable generating facilities in California, and increase the market for biogas in California.
3. Bloom's petition to allow directed biogas to qualify for SGIP Level 2 incentives can further SGIP goals.
4. Bloom's petition should be granted as long as it is modified to require directed biogas to meet local utility injection standards consistent with RPS delivery requirements for biogas injections as currently in effect.
5. The ability to qualify for Level 2 incentives for using directed biogas should not be limited to fuel cells but should apply to all eligible gas-fired generators under the program.
6. The 20 percent "California adder" should be calculated on the base incentive of $2.50 per watt applicable to the installation of a DG non-renewable fuel cell project. If a facility uses renewable fuel and thus qualifies for a Level 2 incentive, the additional $2.00 per watt incentive for fuel cells operating on renewable fuel will be added after the 20 percent California adder.
IT IS ORDERED that:
1. The petition filed by Bloom Energy Corporation to modify Decision 01-03-073 is granted as modified below.
2. The Self Generation Incentive Program program administrators shall implement program handbook revisions, as set forth in Appendix A, which contains the following modifications in Sections 5 through 9:
a) Any Self Generation Incentive Program eligible gas-fired generator that uses directed biogas may qualify for Level 2 incentives.
b) Any facility seeking Level 2 incentives for use of directed biogas shall meet currently applicable Renewable Portfolio Standard biogas delivery requirements, which are currently as follows:
· The gas must be injected into a natural gas pipeline system that is either within the Western Electricity Coordinating Council region or interconnected to a natural gas pipeline in the Western Electricity Coordinating Council region that delivers gas into California.
· The gas must be nominated for use at a facility that is Self Generation Incentive Program eligible.
· When applying for Self Generation Incentive Program funding, the applicant shall include: 1) an attestation from the facility operator of its intent to procure directed biogas and 2) an attestation from the fuel supplier that the fuel meets currently applicable Renewable Portfolio Standard eligibility requirements for biogas injections.
c) The 20 percent adder for using a California supplier of Distributed Generation resources, as defined in Pub. Util. Code § 379.6(g) shall be calculated on the non-renewable Distributed Generation facility rate of $2.50 per watt before adding the additional $2.00 per watt incentive for using renewable fuel.
3. Rulemaking 08-03-008 remains open.
This order is effective today.
Dated September 24, 2009, at San Francisco, California.
MICHAEL R. PEEVEY
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
AMENDMENTS TO THE SGIP HANDBOOK
(Note: Commission additions are shown in underline.)
The SGIP Program Administrators manage the SGIP Handbook, and changes are normally made to the Handbook by obtaining the agreement of the SGIP Working Group. The proposed revisions to the 2009 SGIP Handbook to enable Directed Biogas are provided below:
1) Remove all references to "onsite" that are superfluous
· Section 184.108.40.206 (System Sizing Based on Future Load Growth or Availability of Renewable Fuel)
· Section 4.3.2 (Proof of Adequate Renewable Fuel)
2) Insert gas verification protocols:
Add the following language to section 2.6.1
If the renewable fuel is delivered from off-site, the following conditions and verification protocols must be utilized:
1) Project Guidelines:
a. Host Customer should design the project to be powered by at least 75% renewable fuel for at least 5 years.
b. Renewable Fuel Supplier facility must produce fuel that meets the SGIP definition of renewable fuels.
c. The installation must exclusively use a revenue-grade, net generation output meter (NGOM) that can be remotely monitored by the utility.
2) Reservation Request. SGIP Reservation Requests for Level 2 incentive using off-site renewable fuels must include:
a. Forecasted fuel consumption of generator over the life of project. If multiple periods apply, then the consumption in each period should be identified.
b. Documentation that shows that the third party gas provider can inject the renewable fuel into the utility pipeline.
c. Confirmation that the project is designed to include a revenue grade NGOM meter that will exclusively measure input fuel to the system.
3) Once the above materials are deemed adequate by the relevant SGIP PA, SGIP will grant a Conditional Reservation to the Host Customer.
4) The customer will then work in parallel to advance the project and work with the Supplier to develop and execute a binding renewable fuel contract.
5) Renewable Fuel Contract. A copy of the executed renewable fuel contract is provided to SGIP at the proof of project milestone. The following criteria must be included in the contract:
a. Contract should at a minimum include term (minimum of 5 years), cost, amount of renewable fuel injected on a monthly basis for the length of the contract, address of renewable fuel facility, and facility address of Host Customer.
b. SGIP has the right to audit & verify Customer Generator's consumption of renewable fuel consumption upon request over the life of the contract.1
c. The Host Customer will consume the contracted renewable fuel for the sole purpose of powering the SGIP systems.
d. The contract includes a forecast for at least 75% of the system's anticipated fuel consumption. One possible schedule:
Fuel Demand Schedule for SGIP System
e. True-up Mechanism. The Supplier & Customer will handle variations in actual consumption vs. the contract as follows:
A. True ups will occur quarterly, or as otherwise specified, based on actual consumption of the system over the preceding quarter.
B. Customer and Renewable Fuel Supplier will agree to true up based on actual deliveries of renewable fuel. Note that the fleet of SGIP systems will have its own revenue-grade, NGOM meter that is readable - often remotely over the internet - by the utility.
i. If less onsite fuel is consumed than renewable fuel is nominated into the pipeline, then parties can agree to a financial make-whole provision.
ii. If more onsite fuel is consumed than renewable fuel is nominated into the pipeline, then parties can agree to a make whole provision, such that Customer Generator consumes at least 75% renewable fuel, as measured annually, per SGIP Handbook section 2.6.1.
C. Customer & Supplier recognize that the final SGIP Incentive Payment will not be made until the renewable fuel contract is executed and the renewable fuel is being supplied to the Customer.
6) Incentive Claim Stage. The following information must be submitted at the Incentive Claim stage:
a. Documentation for the Supplier showing that the fuel is renewable, and that it meets the quality standards to be injected into the local natural gas pipeline.
b. Documentation showing that the contract has commenced, and the Supplier has begun nominating the renewable fuel into the pipeline.
7) Verification, Audits, & Refund Terms. After the incentive is issued, SGIP requires a yearly audit process for five years after the renewable fuel contract commences. The audit process works as follows: at the completion of each year, the Customer must provide the SGIP Program Administrator with the preceding 12 months of invoices for renewable fuel purchases. The Program Administrator will review the invoices to ensure that the Customer is satisfying the intent to procure renewable fuel to meet at least 75% of the generator's consumption.
Audits can be conducted remotely, thereby reducing costs for the SGIP program.
a. If invoices show that nominated renewable fuel deliveries fell below 75% of the generator's fuel demand over the same period, and the generator is not malfunctioning such that it consumes more fuel than originally forecast for the nomination, then the SGIP Program Administrators have the right to request that the Customer refund the difference between the higher renewable Level 2 SGIP incentive and the lower, non-renewable Level 3 SGIP incentive.
8) If the Host Customer decides to change their renewable fuel Supplier, or if the Customer's current renewable fuel Supplier cannot meet the obligations to perform as set forth in their contract, then the Customer is allowed to find a new supplier within 90 days, so long as they remain in compliance with the standard Level 2 SGIP requirement (section 2.6.1) that at least 75% renewable fuel is consumed on an annual basis during this period of transition. Once Customer finds a new Supplier, then they must enter into a new contract that provides for at least 75% of the system's anticipated consumption.
a. Any SGIP eligible gas-fired generator that uses directed biogas may qualify for Level 2 incentives.
b. Any facility seeking Level 2 incentives for use of directed biogas shall meet currently applicable RPS biogas delivery requirements, which are currently as follows:
_ The gas must be injected into a natural gas pipeline system that is either within the Western Electricity Coordinating Council (WECC) region or interconnected to a natural gas pipeline in the WECC region that delivers gas into California.
_ The gas must be nominated for use at a facility that is SGIP eligible.
_ When applying for SGIP funding, the applicant shall include: 1) an attestation from the facility operator of its intent to procure directed biogas and 2) an attestation from the fuel supplier that the fuel meets currently applicable Renewable Portfolio Standard eligibility requirements for biogas injected into a natural gas pipeline.2
c. The 20 percent adder for using a California supplier of Distributed Generation (DG) resources, as defined in Pub. Util. Code § 379.6(g) shall be calculated on the non-renewable DG facility rate of $2.50 per watt before adding the additional $2.00 per watt incentive for using renewable fuel.
(END OF APPENDIX A)
1 Since directed biogas is "notionally delivered," auditing and verification should involve review of contracts and deliveries rather than actual consumption of the fuel.
2 RPS eligibility requirements shall pertain to the source of the biogas, the conditions of its injection, and the measurement of biogas supply only. The SGIP generating facility need not be certified as RPS eligible, nor must the electricity produced necessarily qualify for RPS.