7. Increase the Size of Eligible Facility to 3 MW

This decision implements the statutory amendments by increasing the maximum size of the eligible facility to 3 MW.

As originally enacted by AB 1969, § 399.20(b)(2) applied to facilities with an effective capacity of not more than 1.5 MW. In D.07-07-027, the Commission implemented a program under § 399.20 with a capacity limitation of 1.5 MW. SB 32 increased the capacity to 3 MW but the Commission has not yet implemented this change. SB 2 1X made no change to this provision of § 399.20.

SunEdison, Silverado Power, Solar Alliance, and Vote Solar Initiative support increasing the project eligibility to 3 MW and either find no potential reliability issues or suggest any system impact issues to the electrical grid will be addressed through the interconnection process under Tariff Rule 21 or the applicable federal rules. PG&E also supports increasing the capacity limitation of the program and indicates that it is unaware of any existing reliability issues, although increased reliance on this program and others may raise reliability concerns in the future. DRA supports the increase as offering an opportunity for economies of scale and therefore lower pricing.

Clean Coalition supports increasing the capacity beyond the 3 MW capacity limitation in the statute and suggests the Commission, on its own authority, further increase the capacity limitation to 5 MW. Clean Coalition points to expedited interconnection processes that apply to projects up to 5 MW to justify its request. Joint Solar Parties support an increase to 5 MW. Sustainable Conservation points to the benefits to the grid offered by the increased project size and to developers in terms of financial viability.

Several parties raise concerns about opening the program to larger generators. SDG&E states that to increase the size of eligibility, the Commission would need to: (1) ensure that generators continue to carry the costs of electrical system upgrades; (2) subject projects larger than 1.5 MW to the same security requirements as bidders in the standard RPS solicitation; (3) adopt delivery guarantees and damage provisions to allow the utility to manage its resource planning; and (4) apply the CAISO penalty provisions to ensure developers provide accurate schedules. SCE generally agrees with SDG&E that increased capacity will result in increased costs for electrical system upgrades.

CALSEIA states that the increase in size of the eligible facility should occur gradually to promote projects located close to load centers and that the utilities should be authorized to request bidders to modify project size to facilitate increased grid reliability. CALSEIA requests the Commission direct the electric utilities to work cooperatively with potential distributed generation projects to assist developers in identifying locations where the addition of renewable generation of a particular size will improve system reliability. CALSEIA explains that coordination will assist developers with the overall success of project development at the lowest costs.

We find that increasing the maximum project size to 3 MW is reasonable based on the Commission's obligation to implement the provisions of the statute and note that any reliability concerns triggered by individual generating facilities are appropriately identified and mitigated within the interconnection process. We decline to adopt a 5 MW program size limitation since the plain language of § 399.20(b)(1) clearly defines the effective capacity of not more than 3 MW.

We disagree with CALSEIA's recommendation to increase the size of eligible facilities gradually until the size of 3 MW is reached. We find no connection between a gradual increase in project size and CALSEIA's objective to encourage generation to locate near load centers. We do, however, find that today's implementation of the requirement that generation be "strategically located," per the statute, will achieve the goal of encouraging load to locate near load centers. The meaning of "strategically located," is further discussed in Section 6.9. Furthermore, neither CALSEIA nor any other party provided evidence that increasing the size to 3 MW will negatively impact grid reliability. For these reasons, we do not adopt CALSEIA's recommendation to gradually permit an increase in project size.

Sierra Club makes a brief argument that the FiT maximum project size should be determined by "the amount of generating capacity that can be reliably generated." Sierra Club, however, does not explain how to determine the amount of capacity that can be "reliably generated" nor does Sierra Club state the benefits of such a policy. Accordingly, we do not adopt Sierra Club's proposal but note that Sierra Club's comments highlight the need for additional clarity around what facilities fall within the 3 MW size limit. Today we clarify that the 3 MW AC size limitation corresponds to the nameplate capacity of the facility.

We note further that the 3 MW size is aligned with the general framework of the proposed settlement revising Rule 21 (filed in R.11-09-011 on March 16, 2012). As we have stated in R.11-09-011, exporting generating facilities do not have a clear path to interconnection under the presently effective Rule 21.71 The May 16, 2012 settlement's proposed revisions to Rule 21 would expressly permit exporting facilities sized up to 3 MW in SCE's and PG&E's service territories and 1.5 MW in SDG&E's service territory to be evaluated under the Fast Track process.72 While the Commission has not yet acted on the proposed interconnection settlement in R.11-09-011, the proposed Fast Track size limits would advance the statutorily required "expedited interconnection" for resources in this program.73

Accordingly, PG&E, SCE, and SDG&E shall add a provision reflecting the increase in eligible generator projects to 3 MW to the FiT Program standard form contract and/or tariff that is being developed in this proceeding in accordance with the schedule set forth in the January 10, 2012 ALJ ruling. The Commission will review this provision submitted by the utilities and, in a separate decision accept, reject, or modify the provision. Related FiT tariff modifications will also be addressed in this separate decision.

71 R.11-09-011 at 4-5.

72 Motion for Approval of Settlement Agreement Revising Distribution Level Interconnection Rules and Regulations, Proposed Revised Rule 21 at Section E.2.b.i.

73 § 399.20(e).

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