Increase in System Size Cap
In a proposal issued for comment on April 25, 2006, staff reviewed current system size data from a sample of 2006 SGIP solar project applications.2 The data indicated that sizing solar projects based on 100% of annual historical usage allows customers greater flexibility in sizing their DG facilities, reflects the sites' actual usage, and still prevents potential over-sizing of systems relative to annual energy use. Based on that analysis, Energy Division staff proposed changing the solar project size cap from 100% of peak load to 100% of annual historical usage and asked parties to comment on whether the change in the size cap should apply to non-solar SGIP applications as well.
Comments from numerous solar industry representatives, namely ASPv, PV Now, The California Solar Energy Industries Association, and Sun Light & Power Company (Sunlight), agree with the staff recommendation to allow solar projects sized up to 100% of historical usage. They maintain the sizing limit based on 100% of peak load did not allow customers to size their systems appropriately to offset their annual energy use through net metering. Specifically, Sun Light states that a limit based on 100% of peak demand is not appropriate for solar DG projects that may produce power only during a limited number of hours per day. It claims that a system sized only for peak demand will never be large enough to offset the customer's total energy usage. These parties further maintain that allowing customers greater flexibility to size systems larger than 100% of peak load is critical in meeting CSI megawatt (MW) targets.
The program administrators of current SGIP incentive programs were not unanimous in their views. Pacific Gas and Electric Company (PG&E) and the San Diego Regional Energy Office (SDREO) agreed with the staff proposal to change the solar project size cap. SDREO recommends non-solar system sizes be addressed later in this proceeding with all other non-solar issues. Further, SDREO suggests that if a facility has a capital improvement plan or other documentation of future load growth, it should be able to size its system with that expansion in mind rather than historic usage. San Diego Gas and Electric Company and Southern California Gas Company (SDG&E/SoCalGas) support retaining the current limit based on 100% of peak demand because they contend the sizing requirement should be consistent for solar and non-solar DG technologies. Southern California Edison Company (SCE) supports returning to a 200% of peak demand standard for systems larger than 30 kilowatts. SCE does not support a sizing standard based on expected annual energy output because it will require program administrators to estimate the likely solar generation from a customer's system.
Discussion
After further review, we conclude that the system size requirement for solar facilities adopted in D.06-01-024 is too restrictive to allow customers to meet all or most of their annual electricity requirements from their solar project. If we allow customers to size systems based on 100% of annual historical usage, we avoid being too restrictive in our sizing requirements and we allow customers to size systems larger than a 100% peak load restriction. Historic site usage information is readily available for existing structures, may be estimated for new buildings, and should not present a burden to program administrators. The goal of our SGIP and CSI programs is to facilitate the installation of large amounts of on-peak electricity generation from DG facilities. We do not want to inadvertently restrict the size of solar facilities, thus forcing the installation of twice as many smaller solar projects to meet our MW goals. Therefore, we adopt the staff proposal to revise the system size requirement for solar projects from 100% of peak load to 100% of annual historical usage, based on the previous 12 months usage data.3
SDREO suggests we not restrict customers to sizing based on historical usage, but allow customers to size facilities larger if they can document expansion plans. The current SGIP program handbook already contains detailed language concerning the sizing of systems for future load growth. Nothing in today's decision modifying the system size requirement modifies the existing program handbook language. The program administrators should continue to process applications involving future load growth in the manner described in the current program handbook.
The system sizing requirements adopted in this order shall apply to all solar project applications received under the 2006 SGIP rules as well as future SGIP solar and CSI projects. The program administrators should accept amended 2006 applications from customers who want to install solar facilities larger than D.06-01-024 had allowed.4 The system size change does not apply to projects on the SGIP waiting list as of December 2005, and the change does not impact system size requirements for non-solar SGIP applications. Indeed, when the Commission changed the system size requirement in D.06-01-024, the change only applied to solar applications. The sizing requirements for non-solar applications were not modified by D.06-01-024 and there is no basis for modifying them in this order.
In comments on the draft decision, the SGIP program administrators contend allowing customers to amend previously filed applications and increase their system sizes based on the new sizing requirements may have the effect of reducing or eliminating incentive funds already allocated to other projects. They suggest any incremental system size adjustments be treated as new supplemental applications subject to availability of funds. This would essentially treat any size changes as new applications.
In response to these comments, we will require program administrators to send a letter, within five days from the date of this order, to all SGIP solar applicants with 2006 conditional reservations advising them they have 30 days from the date of the letter to file amended applications to increase their system size. If the administrators are concerned that amended applications will cause them to reach the 50 MW "trigger" for an incentive reduction from $2.80 per watt to $2.50 per watt, as described in D.06-05-025, they can choose to withhold issuing new conditional reservations during this 30-day period. Furthermore, we clarify that program administrators should manage incentive funds based on the order of the original filing date of incentive applications (i.e., the order in which original applications were entered into the system), on a first-come, first-served basis. This means that any amended applications received during this 30-day period should have access to incentive funds in the order of the timing of their original application. This may cause a later application to get "bumped down" to a lower incentive level. We are aware of this unfortunate potential, but are adamant that projects that wish to resize should not face a lower incentive level because we have now determined our initial sizing requirement was inadequate. The order of original application timing should determine access to incentive funds, and not the date of amendment.
2 Administrative Law Judge's (ALJ) Ruling Requesting Comment on Staff Proposal, April 25, 2006, and Attachment entitled "CPUC Energy Division Proposal," Section 2.5, pages 26-27.
3 In comments on the draft decision, the SGIP program administrators request the Commission clarify the formula for maximum system capacity. Golden Sierra also comments regarding capacity factors for this calculation. The comments improperly raise new issues and facts regarding formulas and capacity factors that were never previously discussed in the record on this issue. Commission Rule 77.3 requires comments be limited to factual, technical or legal errors in the draft decision. New factual information cannot be included in comments. If the formula for system size calculations was critical, parties should have raised this earlier. We assume this level of detail is contained within the SGIP program handbook, which the decision does not alter other than to direct a change from 100% peak load to 100% annual historical usage. We see no need to provide further specificity on formulas within this order.
4 If project sizes decrease with this new requirement, the program administrators should allow a one-time exception to allow already filed projects to proceed.
