2. Background

In D.01-03-073, the Commission authorized the SGIP to encourage the development and commercialization of new DG technologies.¹ Under the SGIP, certain entities qualify for financial incentives to install DG to serve some portion of a customer's onsite load. In subsequent orders, the Commission refined the program, taking actions such as adopting a reliability requirement, developing renewable fuel criteria, and increasing the maximum project size eligible for incentives.

With regard to project size, the Commission initially limited both the size of eligible projects and incentives to 1 MW, reasoning that the size limit "represents a fairly large installation for a single customer site and, at the same time, will not use up an unreasonable amount of program funding." (D.01-03-073, at 29.) In a subsequent order, the Commission increased the project size eligible to participate up to 5 MW to "allow developers, customers, utilities and ratepayers to receive cost savings achieved by larger projects." (D.04-12-045 at 9.) Despite raising this maximum project size, the Commission retained the cap on incentives at 1 MW due to concerns about depleting limited SGIP budgets. (Id.)

For 2008, the SGIP budget is $ 83 million, as set forth by the Commission in D.08-01-029. In addition, the SGIP is limited by Pub. Util. Code § 379.6 to funding only wind and fuel cell DG projects, effective January 1, 2008.

¹ "Self-generation" refers to distributed generation technologies (microturbines, small gas turbines, wind turbines, photovoltaics, fuel cells and internal combustion engines) installed on the customer's side of the utility meter that provide electricity for a portion or all of that customer's electric load. In D.06-01-024, the Commission directed that starting in 2007, photovoltaic self-generation projects would be separately funded through the California Solar Initiative, rather than the SGIP.