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Distributed Generation and Renewable Energy

CURRENT PROGRAMS FOR BUSINESSES

The California Public Utilities Commission (CPUC) issues this document to provide businesses with information about distributed generation (DG) and renewable energy resources, literature references and available incentive programs. To the extent possible, it will be updated as more information becomes available, but since we are requiring utilities to administer the programs, we suggest you use them as your first resource.

Some distributed generation facilities are considered "renewable," meaning that they operate on a renewable fuel such as sunlight, wind, anaerobic digester gas, "biofuels" or biomass. Examples of distributed generation technologies include:

The programs directed by the California Energy Commission (CEC) are in effect now; contact the CEC or utilities directly for further information on business and residential programs. The Website addresses for the CEC, Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E), are:

CEC: http://www.energy.ca.gov/greengrid

PG&E http://www.pge.com/003_save_energy/003b_bus/index.shtml

Edison http://www.sce.com/002_save_energy/index.shtml

SDG&E http://www.sdge.com/efficiency/index.html

The programs directed by the California Public Utilities Commission (CPUC) and applications for them should be available by this summer.

The CPUC neither endorses nor recommends any particular organization or product mentioned in this document but provides them as a guide for further information.

STATE INCENTIVE/BUYDOWN PROGRAMS

California Public Utilities Commission

Self-Generation Program

CPUC Decision:

http://www.cpuc.ca.gov/PUBLISHED/FINAL_DECISION/6083.htm

This program provides incentives for customers of investor-owned utilities to use microturbines, small gas turbines, wind turbines, photovoltaics, fuel cells and internal combustion engines to provide some or all of that customer's electricity. Greater incentives will be provided for using super clean or renewable fuel. No incentives are provided for diesel-powered generation.

The following table describes the incentive payments and maximum incentive and system size limits. Please note that the CEC also has a program similar to Level 1 and consumers may qualify for incentives with the CEC and the CPUC program but up to a maximum of $4.50/W:

Incentive category

    Incentive offered

Maximum percentage of project cost

Minimum system size

Maximum system size

Eligible Technologies

Level 1

$4.50/W

50%

 30 kW 1 MW

_ Photovoltaics

_ Fuel cells operating on renewable fuel

_ Wind turbines

Level 2

 $2.50/W

40%

 None 1 MW

_ Fuel cells operating on non-renewable fuel and utilizing sufficient waste heat recovery

Level 3

 $1.00/W

30%

None

 1 MW

_ Microturbines utilizing sufficient waste heat recovery and meeting reliability criteria

_ Internal combustion engines and small gas turbines, both utilizing sufficient waste heat recovery and meeting reliability criteria

The program will be administered by the utilities in the territories of PG&E, SCE, and Southern California Gas. In SDG&E's service territory, the program will be administered by the San Diego Regional Energy Office. Questions about these programs should be directed to those agencies.

The CPUC and program administrators are currently working on an accelerated timeline to develop program guidelines and an application process for the incentives. Applications for the program are expected to be available early in June. The program administrators will take no reservations or letters of intent before that time.

California Energy Commission

Emerging Renewables Buydown Program

http://www.energy.ca.gov/greengrid

Energy Call Center: 800-555-7794

The buydown program is available to customers of California's investor-owned utilities.

Technologies: Photovoltaics, small wind (less than 10 kW), fuel cells (renewable fuels only), solar thermal electric

Incentives: $3.00/Watt for small residential systems (under 10 kW), up to a maximum 50% of system cost.

Project limits: Renewable energy systems installed under this program must be interconnected with the utility grid. A system should primarily offset part or all of the customer's electrical needs, but must not be sized greater than 200 percent of on-site peak demand. The maximum buydown amount is $2.5 million for a single project.

Buydown Process: Customers make a reservation of funds with the CEC prior to construction of the project. This reservation will expire after nine months for smaller systems (under 10 kW) or eighteen months (all other systems). Once the system is completely installed and operational, customers then request the buydown payment by submitting the required documentation to the CEC. Within 30 days of receipt of a completed claim form, the CEC will issue the incentive payment. This completes the buydown process.

The complete buydown program guidebook is available on the CEC website by visiting the "greengrid" link listed above.

California Energy Commission NEW INFO

Solar Energy and Distributed Generation Grant Program

http://www.consumerenergycenter.org/solaranddg

Energy Call Center: 800-555-7794

California residents who are purchasers, sellers, owner-builders, or owner-developers of eligible solar energy or distributed generation systems are eligible to apply.

Technologies: Solar domestic water heating systems, solar swimming pool heating systems, battery backup for PV systems, distributed generation

Incentives: $750 for solar water heaters

The complete buydown program guidebook is available on the CEC website listed above.

Connecting a Distributed Generation System to the Utility Grid

Self-generation systems must be interconnected with the local electric utility's grid to be eligible for both the CPUC Self-Generation and CEC Emerging Renewables Buydown Programs. The interconnection must comply with any applicable electrical codes and interconnection requirements. Once your generation system is installed, you must obtain permission from your electric utility to connect the system to their distribution grid. Your installer should be able to help you negotiate this process, or you may contact the utility directly and ask how you can execute an "interconnection agreement."

Net Metering NEW INFO

Net Metering is a term used to describe the "netting" of excess electricity that you generate with the utility using your existing electric meter. That is, if you generate more electricity than you are using at your residence, the electricity is sent back to the utility grid which turns your meter backward.

Only solar electric and wind generators less than 1 megawatt in size are eligible for Net Metering.

There is a common misconception that the utility will pay customers for the amount of the excess energy. No money changes hands under California's Net Metering law. Instead, excess electricity from the PV (photovoltaic) system is "banked" with the utility at the retail rate, effectively spinning the customer's meter backward. When the customer consumes more electricity than is produced by the PV system (i.e. takes electricity from the grid), the meter spins forward - so the utility grid acts as a "bank" for the energy. The transaction occurs at the retail rate, or the appropriate "time of use" rate for customers with meters which record their time-of-day usage (and thus are billed for energy at different rates on that basis). At the end of a yearly billing cycle, any net excess solar or wind energy sent to the utility system is "zeroed out" and credited to the utility - the customer is not paid for this energy.

Contact your local electric utility and ask about their tariffs for Net Metering.

Advocacy Groups

_ Distributed Power Coalition of America

Founded in 1997, the Distributed Power Coalition of America (DPCA) is an advocacy organization committed to advancing the use of distributed power. Members include: electric and gas utilities; consumers; distributed power equipment manufacturers and suppliers; natural gas transmission pipeline companies; gas and electric marketers; and research organizations. The DPCA was founded by these companies to aggressively advocate the concept of distributed power. One of the DPCA's goals is to remove regulatory and legislative impediments to the use of distributed power technologies.

The DPCA provides a unique opportunity to individuals and companies with a potential stake in distributed power to pool their resources and work together more effectively to advance its uses.

_ California Alliance for Distributed Energy Resources (CADER)

CADER is a voluntary collaborative committed to facilitating the successful deployment of highly efficient and environmentally responsible distributed energy resources into competitive energy markets.

_ Silicon Valley Manufacturing Group

The Silicon Valley Manufacturing Group (SVMG) is organized to involve principal officers and senior managers of member companies in a cooperative effort with local, regional, state and federal government officials to address major public policy issues affecting the economic health and quality of life in Silicon Valley. While not specifically organized as a DG advocacy group, SVMG members have been actively exploring distributed generation options.

Publications

Arthur D. Little, a major consulting firm, has published four white papers on DG issues. The first three white papers listed below are available for download from:

http://www.adl.com/dg/downloads/DGpapers.html

_ Emissions Impacts

"Air Pollution Emission Impacts Associated with Economic Market Potential of Distributed Generation in California," June 2000, prepared for the California Air Resources Board and California EPA by Distributed Utility Associates. Available from the CARB DG website at:

http://www.arb.ca.gov/energy/dg/9-25-20001.pdf

_ Interconnection Standards

The California Energy Commission convened a working group to develop interconnection standards for DG. The utilities were then ordered by the CPUC to file advice letters modifying their Rule 21 interconnection requirements accordingly. The final CEC report to the CPUC is available on the web:

http://www.energy.ca.gov/reports/2000-11-07_700-00-014.PDF

_ CEQA and Permit Streamlining

The CEC also convened a working group to address issues of permit and CEQA (California Environmental Quality Act) streamlining. The final report to the CPUC is available on the web:

http://www.energy.ca.gov/reports/2000-12-21_700-00-019.PDF

Regulatory Proceedings

_ The California Public Utilities Commission is investigating DG issues in several capacities. Commission Rulemaking R99-10-25, October 1999, considers a number of issues related to distributed generation, such as:

The Commission held a series of hearings in two phases to obtain parties' input on these issues. In response to the interconnection, CEQA, and permit streamlining, the California Energy Commission convened several working groups and produced two reports for the CPUC as part of the Rulemaking proceeding. These reports are referenced and linked in the above section titled "Publications."

An interim proposed decision on standby charges was issued for public comment on March 19. The Commission is scheduled to consider the proposed decision at its May 24 meeting.

http://www.arb.ca.gov/energy/dg/dg.htm

The ARB is required by Senate Bill 1298 to adopt a certification program for DG facilities which are exempt from local air district permits, and to issue guidance for DG which is subject to district permit. A work group has been formed to help the ARB further develop the regulation and guidance.

State Legislation

See http://www.leginfo.ca.gov and click on "Bill Information."

Assembly Bill 29x, signed by Gov. Davis on April 11, 2001, addresses DG among several other issues, and has consolidated several other related DG bills. This bill was signed into law on April 11, 2001. The bill promotes distributed generation as follows:

_ Expands the limits for net metering for solar and wind systems to 1 megawatt;

_ Appropriates $15 million from the General Fund and $15 million from Renewable Resource Trust Fund to augment the Emerging Renewable Resources Account (CEC buydown program) to promote distributed generation;

_ Appropriates $40 million for a Renewable Energy Loan Loss Reserve Fund to guarantee loans for renewable energy projects;

_ Appropriates $25 million to the California Alternative Energy and Advanced Transportation Financing Authority for financial assistance to public power entities, independent generators and others to develop clean distributed generation.

Other DG-related bills are pending; visit the web link above to search for these bills.

Financing Resources

Many homeowners finance renewable energy systems through mortgage refinancing, Energy Efficient Mortgages, home equity loans, conventional bank loans, lines of credit, and cash payments.

The CEC has prepared a list of financial institutions providing loan assistance for renewable energy systems. The list is available online at:

http://www.energy.ca.gov/greengrid/solar_financing.html

Small businesses may have other resources, such as Small Business Administration (SBA) loans. One California agency makes loans for energy efficiency and renewable energy at approximately five percent interest with five year terms. This agency, the State Assistance Fund for Enterprise, Business and Industrial Development Corporation (SAFE-BIDCO), administers an Energy Efficiency Improvements Loan Fund. They may be contacted at 707-577-8621, or on the Web at http://www.safe-bidco.com/

As noted above, AB 29x provides funding for a Renewable Energy Loan Loss Reserve Fund to guarantee loans for renewable energy projects. These guarantees will be made to conventional lenders. AB 29x also appropriates additional monies that may be used either for rebate-style buydowns or low-interest financing.

Distributed Generation Technologies

_ Microturbine Products

Capstone Turbine Corporation

Honeywell Corporation

Ingersoll-Rand

DTE Energy Technologies

_ Photovoltaic and Small Wind Products

Lists of retailers and installers:

http://www.energy.ca.gov/greengrid/companyslist.html

Click on "Business Search", then "Search by Location" and select your state

_ Fuel Cell Products

International Fuel Cells

http://www.internationalfuelcells.com

200 kW phosphoric acid fuel cell (PAFC) product

Fuel Cell Energy

http://www.fuelcellenergy.com

300 kW, 1.5 MW and 3 MW fuel cell power plants

"Green power" Products in California

Recent energy prices and market conditions in California forced most electric service providers (ESPs) offering "green power" products to return their customers to traditional utility service. There are a small number of ESPs still accepting new customers, and at least one within PG&E's service territory. For further research, visit the following web sites:

http://ora.ca.gov/Sb477/MatrixIntro.htm

http://www.consumerenergycenter.org/renewable/choosing/providers.html

Internet addresses are subject to change. Refer to http://www.energy.ca.gov/distgen/documents.html, which serves as a common repository for CEC DG-related documents.

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