Overview

Description

This program is intended to encourage installation of several types of self-generation technologies, both renewable and non-renewable, as detailed below. The installations may occur at any type of customer site in California. This proposal is designed to complement the current CEC buy-down program, which tends to fund smaller renewable units, while capturing the significant benefits of larger distributed generation units. Such benefits include: greater reduction of grid-supplied electricity, lower installation cost per kW, and, in the case of renewable installations, greater environmental benefits for all Californians.

This program targets photovoltaic, wind, and renewable fuel cell installations of 10 kW or greater. Customers installing units beginning January 1, 2001 should be eligible for program incentives regardless of when they become available.

This program offers differential incentives for self-generation technologies, differentiated by their fuel type, air emissions characteristics, and system costs. Photovoltaics, wind turbines, and fuel cells using renewable fuels are eligible for $4.50 per watt of installed on-site renewable generation capacity, up to a maximum of 50% of total installation costs. Nonrenewable fuel cells utilizing waste heat recovery and meeting reliability criteria may receive $2.50 per watt, up to a maximum of 40% of system cost. Any type of microturbine or internal combustion engine utilizing waste heat recovery may qualify for $1.00 per watt of on-site generation, up to 30% of total project costs. Administrators will administer this program through their existing energy efficiency standard performance contract (SPC) programs and/or similar program approaches. Contractors and energy service companies participating in this program will also be eligible to receive incentives on behalf of customers.

Rationale

In AB 970, the California legislature demonstrated that renewable technologies and self-generation are a policy priority. Self-generation and the use of renewables can provide significant benefits to Californians by improving the quality and reliability of the state's electricity distribution network, which is critical to the state's economic vitality, while protecting the environment and developing "green" technologies. The statute directs the Commission to adopt incentives for distributed generation to be paid for enhancing reliability, and differential incentives for "renewable or super-clean distributed generation resources."¹¹

The self-generation incentives provided through this programs are intended to:

_ encourage the deployment of distributed generation in California to reduce the peak electric demand;¹²

_ give preference to new renewable energy capacity; and

_ ensure deployment of clean self-generation technologies having low and zero operational emissions.

Given the high prices experienced over the last year, the transmission constraints that will persist in California for the near future, air quality considerations, California's residents and businesses are more receptive than ever to thinking about alternative generation resources. The biggest drawback is cost. It is in the best interest of all Californians to reduce the strains on infrastructure, economy, and environment, by actively promoting renewable and super-clean technologies.

Objectives

The main objectives of this program are to fulfill the requirements of PU Code §399.15 (b) paragraph 6 and 7, which call for "incentives for distributed generation to be paid for enhancing reliability" and "differential incentives for renewable or super clean distributed generation resources." This program also meets the following additional objectives:

_ Utilize an existing network of service providers and customers to provide access to self-generation technologies quickly

_ Provide access at subsidized costs that reflect the value to the electricity system as a whole, and not just individual consumers

_ Help support continuing market development of the energy services industry

_ Provide access through existing infrastructure, administered by the entities with direct connections to and trust of small consumers

_ Take advantage of customers' heightened awareness of electricity reliability and cost.