10. Project Viability Criteria for § 399.20 Feed-In Tariff Program

In March 2011 briefs, SunEdison, CALSEIA, and Joint Solar Parties suggested that the Commission adopt a means to ensure that only viable projects participate in the program. The Clean Coalition, FuelCell Energy, CEERT, and Silverado Power agreed that it is a critical issue to target viable projects since the amount of capacity in the § 399.20 FiT Program is limited. These parties stated that increasing the viability of contracts executed pursuant to this program will allow for more efficient management of the limited program capacity and benefit the market by reducing speculative contracts.

SunEdison recommends establishing project viability criteria similar to those relied upon in the RAM Program. Agreeing with the need for project viability criteria, CALSEIA requests that the Commission adopt rules to prevent generators from taking advantage of the "first-come-first-served" rule to gain priority while projects may be less than viable. Likewise, the Renewable FiT Staff Proposal recommends project viability criteria, consistent with suggestions by parties. The Staff Proposal and other parties recommend the following project viability criteria:

1) Bid fee: $2/kW bid fee;

2) Interconnection: System Impact Study, Phase I study, or passed the Fast Track screens or supplemental review;

3) Site Control: Attest to: 100% site control through (a) direct ownership, (b) lease, or (c) an option to lease or purchase that may be exercised upon contract execution;

4) Development Experience: Attest that: one member of the development team has (a) completed at least one project of similar technology and capacity or (b) begun construction of at least one other similar project;

5) Online Date: 24 months with one 6-month extension for regulatory delays;

6) Seller Concentration: An individual seller may not subscribe to more than 10 MW of capacity across the program. CALSEIA and PG&E suggest a seller concentration cap of 10 MW per seller. Staff agrees that there should be limit, but recommends a different metric. Staff proposes a seller be limited to 25% of an IOU's total capacity cap; and

7) Commercialized Technology: Attest that: project is based on commercialized technology with at least two installations in the world.

This decision adopts the above-noted project viability criteria 1 through 6. No viability criterion is adopted for commercialized technology (number 7 above). We find that the project viability criteria adopted today will assist in ensuring that projects seeking to participate in the FiT Program will come online, which supports our fifth policy guideline: increase probability of successful projects by establishing project viability criteria.

This decision adopts a seller concentration limit of 10 MW per seller because of the limited number of MWs available for the program. The definition of seller should be further explored in the standard contract phase of this proceeding. We also envision the other program requirements, such as "strategically located" and the three product types, which are discussed elsewhere in this decision, to encourage a diversity of sellers and technologies in the program.

The decision also does not adopt a requirement that the project be based on commercialized technologies. While we expect most projects to utilize commercialized technologies, the FiT Program seeks to provide an opportunity for emerging technologies to develop on a small scale and at a reasonable price. No reason exists to preclude new or emerging technologies from the FiT Program by adopting a commercialized technology requirement.

Accordingly, PG&E, SCE, and SDG&E shall add a provision reflecting the adopted project viability criteria to the § 399.20 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.

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