COM/MP1/lil Date of Issuance 9/16/2011

Decision 11-09-015 September 8, 2011

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Regarding Policies, Procedures and Rules for the California Solar Initiative, the Self-Generation Incentive Program and Other Distributed Generation Issues.

Rulemaking 10-05-004
(Filed May, 6, 2010)

DECISION MODIFYING THE SELF-GENERATION INCENTIVE PROGRAM
AND IMPLEMENTING SENATE BILL 412

DECISION MODIFYING THE SELF-GENERATION INCENTIVE PROGRAM AND IMPLEMENTING SENATE BILL 412 1 1

1. Summary 2 2

2. Background 4 4

3. Ratification of the Assigned Commissioner's Ruling 6 6

4. Proposed SGIP Modifications 7 7

4.1. Statement of Purpose and Program Principles 7 7

4.2. SGIP Eligibility Requirements 10 10

4.2.1. Technology Eligibility Test 10 10

4.2.1.1. Avoided GHG Emissions from the Grid 13 13

4.2.2. Eligible Technologies 16 16

4.2.3. Other Advanced or Emerging Technologies 18 18

4.2.3.1. Advanced Energy Storage (AES) 18 18

4.2.3.2. Pressure Reduction Turbines (PRT) and Waste
Heat to Power Technologies 20 20

4.2.3.3. Fuel Cells 20 20

4.2.3.4. Onsite Biogas (OSB) and Directed Biogas (DBG) Fuel Considerations 21 21

4.2.4. System Size 24 24

4.3. Incentive Design 25 25

4.3.1. Technology-Based Incentive 26 26

4.3.2. Structure of PBI Payments - A Hybrid-PBI 28 28

4.3.3. Incentive Levels 33 33

4.3.3.1. Incentive Rates 33 33

4.3.3.2. Tiered Incentive Rate 38 38

4.3.3.3. Incentive Decline 39 39

4.3.4. Calculation of SGIP Incentive 41 41

4.3.5. Incentive Allocation per Technology Manufacturer 47 47

4.3.6. SGIP Incentive Limit as Share of Project Cost 49 49

4.4. Budget Allocation 51 51

4.5. Other SGIP Program Modifications 53 53

4.5.1. Measurement and Evaluation (M&E) 53 53

4.5.2. Metering Requirements 54 54

4.5.3. Marketing and Outreach (M&O) 56 56

4.5.4. Export to the Grid 58 58

4.5.5. Energy Efficiency Requirements 61 61

4.5.6. Application Fee and Maximum Reservation Hold Time 62 62

4.5.7. Warranty Requirement 66 66

5. Comments on Proposed Decision 67 67

6. Assignment of Proceeding 67 67

Findings of Fact 67 67

Conclusions of Law 68 68

ORDER 70 70

ATTACHMENT A: Modifications to the Self-Generation Incentive Program

DECISION MODIFYING THE SELF-GENERATION INCENTIVE PROGRAM AND IMPLEMENTING SENATE BILL 412

1. Summary

By this decision we modify the Commission's Self-Generation Incentive Program (SGIP) to conform the program to Senate Bill 412 (Stats. 2009, ch. 182). In addition, we modify several aspects of the SGIP to improve program outcomes and facilitate program implementation. Among other issues, we modify the eligibility criteria for participation in the program, incentive amounts and payment structures for eligible technologies, metering and warranty requirements, and budget allocation among eligible technologies.¹

Eligibility for participation in the SGIP will now be based on greenhouse gas emissions reductions. SGIP technologies that achieve reductions of greenhouse gas emissions pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) will be eligible to participate in the SGIP.² The eligible technologies include wind turbines, fuel cells, gas turbines, micro-turbines and internal-combustion engines, organic rankine cycle/ waste heat capture, combined heat and power (CHP), advanced energy storage, and pressure reduction turbines.

Eligible technologies will receive up-front and performance-based incentives (PBI). However, PBI payments will be reduced or eliminated in years that a project does not achieve cumulative greenhouse gas reductions.

The incentives will apply only to the portion of the generation that serves a project's on-site electric load. The maximum total incentives per watt of capacity that each technology may receive are shown in Table 1 below:

Table 1. - SGIP Incentive Levels Category³


Technology Type	Incentive ($/W)
Renewable and Waste Heat Capture
Wind Turbine	$1.25
Bottoming-Cycle CHP	$1.25
Pressure Reduction Turbine	$1.25
Conventional Fuel-Based CHP
Internal Combustion Engine - CHP	$0.50
Microturbine - CHP	$0.50
Gas Turbine - CHP	$0.50
Emerging technologies
Advanced Energy Storage⁴	$2.00
Biogas⁵	$2.00
Fuel Cell - CHP or Electric Only	$2.25

The changes in this decision will only apply to SGIP projects going forward.⁶ In other words, existing SGIP projects will continue to receive the same incentives they were receiving prior to this decision and will continue to operate under the existing SGIP rules. Eligible projects that were completed between January 1, 2011 and the effective date of this decision shall be subject to the program rules that were in place during that time.

The SGIP PAs shall file Tier 2 advice letters proposing handbook revisions necessary to implement this decision. The SGIP is currently suspended. Upon approval of the advice letters, the SGIP suspension will be lifted and the PAs will resume accepting reservation requests for the SGIP.

¹ Attachment A sets forth a summary of all the program changes.

² Any combustion-operated DG project using fossil fuel must meet the emission standards stated in the Air Resources Board's Distributed Generation Certification Program, which can be found in section 94200, et seq. Title 17, California Code of Regulation.

³ Any onsite renewable fuel which meets RPS guidelines should be considered an eligible onsite renewable fuel and be eligible for the OSB based incentive levels. This recommendation allows for onsite biodiesel or waste vegetable oil to qualify.

⁴ Stand-alone or paired with solar PV or any otherwise eligible SGIP technology.

⁵ Note that the biogas incentive is an adder that may be used in conjunction with fuel cells or any conventional CHP technology.

⁶ We note, however, that current rules allow changes to existing program guidelines through advice letters and with staff approval.