California Distributed Generation (DG) Timothy Alan Simon Commissioner, California Public Utilities Commission Chair, Gas Committee, National Association of Regulatory Utility Commissioners Harvard Electricity Policy Group October 12, 2012
What is Distributed Generation (DG)? A broad term that includes: Size: DG is generally considered 1 kw to 20 MW Definition: Distributed power plants (generation) connected throughout the system at distribution voltage, but occasionally at transmission voltage Benefits: Voltage support, reduce transmission & distribution, local reliability, procurement portfolio diversity, demand reduction, flexible siting options, quick development timelines Ownership: DG can be customer-owned, utility-owned, or third-party owned Types of Technologies: Solar PV, solar thermal, wind, CHP (including ICE, micro-turbines, gas turbines), fuel cells, distributed storage (if coupled with generation) Types of Fuel: All (sun, wind, natural gas, biogas, biomass, etc.) 2
DG Policies and Programs DG Type System-Side Generation or Utility-Side Procurement Programs Renewable Portfolio Standard (RPS) Program Feed-in Tariffs IOU Voluntary Programs Renewable Auction Mechanism (RAM) Utility Solar PV Programs Competitive Solicitations and Bilateral Contracts Combined Heat and Power (CHP) Programs Qualifying Facility (QF) Contracts Feed-in Tariff (FIT) under AB 1613 (Blakeslee, 2007) Customer-Side Generation or Self-Generation Go Solar California: Solar Photovoltaic (PV) Rebates California Solar Initiative (CSI) -- CPUC New Solar Homes Program (NSHP) CEC Other Customer-Side Self Generation Rebates Self-Generation Incentive Program (SGIP) CPUC Emerging Renewables Program (ERP) CEC 3
Comparison of DG Policies and Programs Size and Incentives NEM? Customer Generation or Self-Generation Offset Customer s Load CSI: Supports solar generation up to 5 MW in project size with Incentives: Up to 1 MW eligible for incentives through California Solar Initiative (CSI) SGIP: No generation size limitation Up to 3 MW eligible for incentives through Self- Generation incentive Program Projects qualify for Net Energy Metering (NEM) and Net Surplus Compensation Wholesale Generation Procurement (Sell to Utility or Other) Projects of any size eligible for various contracts, but not for incentives, rebates or subsidies. Price and size requirements based on contract path: Renewable Portfolio Standard (RPS) Competitive Solicitations Feed-in Tariff Qualifying Facility program Utility solar programs Renewable Auction Mechanism (RAM) Does not qualify for Net Energy Metering (NEM) - Except for NEM Bio projects (grandfathered) Export? Projects sized to customer load, not designed for export Projects sized for export of generation, size larger than customer onsite load if located at a customer site Demand vs. Supply? Interconnection? Reduces Electricity Demand: Counts Towards Reduced Demand Forecast like Energy Efficiency Most exempt from interconnection charges: Rule 21 allows for Simplified Interconnection Provides Electricity Supply: Counts Towards Procurement and Resource Adequacy Obligations Generator pays interconnection charges: May interconnect under CPUC s Rule 21 or FERC s Self Generation Interconnection Protocol (SGIP) and Wholesale Distribution Access Tariff (WDAT) 4
California Leads the Nation in Installed Solar Solar in California: 1,322+ MW installed PV at 126,567+ locations California is over 2/3rds of nation s solar market and nation s largest rebate program California supports solar self-generation with four interrelated state policies: Rebates, net energy metering (NEM), interconnection policies, and rate structures (e.g. tiered rates, time of use rates) Stone Brewing Co., North County San Diego Courtesy: Stone Brewing Co. San Diego County Water Authority Courtesy: Borrego Solar 5 5
Go Solar California Campaign Goals of Go Solar California SB 1 set goal of 3,000 MW of new customer-owned solar DG SB 1 set goal of a self-sustaining solar industry Statewide Budget $3,551 million budget (2007-2016) from electric ratepayers (sub-portion of budget = $2,367 million overseen by CPUC) $250 million budget (2010-1017) from gas ratepayers California Public Utilities Commission California Energy Commission Publicly Owned Utilities (POU) Total Program California Solar Initiative (CSI) Programs New Solar Homes Partnership (NSHP) Various Go Solar California Budget $2,367 million electric $250 million - gas $400 million $784 million $3,551 million electric $250 million gas Solar Goals (MW) 1,940 MW electric 585 million therms (gas) 360 MW 700 MW 3,000 MW 585 million therms Scope All solar in IOU areas except PV in new homes Solar on new homes in IOU territories All solar in POU areas All of California Note: The electric budgets are for 2007-2016, and the gas budgets are for 2010-2017. 6
California Solar Initiative (CSI) 7 Key Aspects of CSI Program Design Launched in 2007, but built on related distributed generation rebate programs. Focus on Performance: Rebates paid on expected OR actual performance. Declining Incentives: Rebates lower in 10 steps based on market demand: Started at $2.50/watt in 2007 and at $0.20/watt in 2012. Higher rebates for noncommercial. CSI Program Includes 5 Sub-Components 1. General Market Program : Provides incentives to all buildings except new homes, includes electric-displacing CSI-Thermal rebates 2. Single-family Affordable Solar Homes (SASH) Program: Provides rebates to low-income customers in deed-restricted single-family homes 3. Multifamily Affordable Solar Housing (MASH) Program: Provides rebates to multifamily affordable housing in deed restricted multi-family residences 4. RD&D Program: Provides up to $50 million in a program for projects related to CSI goals 5. CSI-Thermal Program: Provides rebates for solar water heating and solar heating/cooling technologies
CPUC s California Solar Initiative (CSI) Budget Two Sources of Funds Program Focus CSI is funded separately by electric and gas ratepayers 5 program subcomponents fund solar PV and solar thermal (including solar hot water) technologies Budget ($ Millions) Goal CSI Electric Budget (2007-2016) $2,367 1,940 MW General Market Solar Program (includes PV and electric displacing CSI-Thermal program) $2,097 1,750 MW Single-family Affordable Solar Homes (SASH) $108 ~15 MW Multifamily Affordable Solar Housing (MASH) $108 ~30 MW Research, Development, Demonstration, and Deployment (RD&D) $50 ~ Solar Water Heating Pilot Program (SWHPP) $2.6 750 SWH systems CSI Gas Budget (2010-2017) CSI-Thermal Program (Gas-Displacing solar thermal/hot water) $250 585 million therms Total CSI Budget $2,617 Note: CPUC D.06-12-033, FOF 15, p. 28 established goal of the general market program as 1,750 MW. The CPUC decisions on MASH and SASH did not explicitly adopt a 95 MW per program goal; however, the CPUC did adopt a total CSI program goal of 1,940 MW in D.06-12-033. In addition, D.10-01-022 established the CSI Thermal Program pursuant to AB 1470 and SB 1. 8 8
CSI General Market Program (2007-2012) Program is 73% of the way towards its goal of 1,750 MW Pending projects have 12-18 months to come online or their funding is made newly available to other projects. Incentives have declined up to 10 times in five and half years Started at $2.50/watt (or ~25% of installed cost) Now at $0.20/watt in most territories (or ~3% of installed cost) Due to declining incentive levels, the CSI budget supports the installation of more MWs as incentives decline. Installed Pending Remaining Total Goal Capacity (MW) 947 MW 332 MW 471 MW 1,750 MW Goal (% of Total) 54% 19% 27% 100% Incentives ($ Million) $1,432M $212M $304M $1,948 M Data includes only CSI General Market Program. Data through September 26, 2012. 9
CSI Program Totals, Installed by Year Number of CSI MW Installed (MW) Number of CSI Solar Projects Installed CSI Incentives Awarded ($) Million 2007 28 MW 3,376 $72 M 2008 121 MW 8,330 $315 M 2009 136 MW 13,063 $284 M CSI program installs more MWs each year with less incentive funding. 2010 152 MW 16,809 $238 M 2011 261 MW 21,406 $308 M Total 698 MW 62,984 $1,217 M Data includes only CSI General Market Program. Data through 2012 10
CSI Rebate as a % of System Costs Average systems cost btw. $7.16-$8.17/watt Breakdown of System Costs by Means of Support ($/watt) Application Type 11 Solar System Cost Components CSI Rebate Federal Investment Tax Credit (ITC) Average System Cost Estimated Net Energy Metering (NEM) Benefits over 20 Year Period Residential $0.20 $2.09 $6.96 $1.00 Percentage 3% 30% 100% Non-Residential $0.20 $1.81 $6.04 $1.00 Percentage 3% 30% 100% Non-Tax Entity $0.70 0 $6.00 $1.00 Percentage 12% 0 100% Data includes only CSI General Market Program. Date: September 2012
CSI Project Costs Declining CSI System costs have declined in five years on a CPI Adjusted basis Size of System Systems Less than 10 kw Systems Greater than 10 kw Quarter/Year Q4 2007 $10.23/watt $9.90/watt Q4 2008 $10.40/watt $9.65/watt Q4 2009 $9.37/watt $7.79/watt Q4 2010 $8.41/watt $7.32/watt Q4 2011 $7.39 /watt $6.47/watt Date: June 3, 2012 12
Track Our Solar Market Progress Go Solar California Portal: Online Consumer Information www.gosolarcalifornia.ca.gov Annually: Reports to CA legislature http://www.cpuc.ca.gov/puc/energy/solar/2012casolarlegreport.htm Quarterly: Public CSI Program Forums in person meetings www.cpuc.ca.gov/puc/energy/solar/forum.htm Monthly: Go Solar California! Newsletter www.gosolarcalifornia.ca.gov/news/ Weekly: All program data available each Wednesday www.californiasolarstatistics.ca.gov 13
Net Energy Metering (NEM) Eligible Technologies: Solar, wind, biomass, geothermal, renewable fuel cells, small hydroelectric generation, digester gas, municipal solid waste conversion, landfill gas, hydro technologies. Onsite Load: Facilities must serve onsite electricity needs Export/Import: NEM customer-generator export to the grid, and import (consume) from grid Only pay for the net on a billing period basis. Credits: NEM customers can rollover excess bill credits up to a year 2010: NEM Customers paid Net Surplus Compensation for any net excess kwh sent to utility on an annual basis. Two Variations on NEM Bill Credit Transfer (BCT) Local government to install renewable generation up to 1 MW at one location within its geographic boundary. Credits can be used to offset charges at one or more other locations within same geographic boundary. Virtual Net Energy Metering (VNM) CPUC established pilot program to allow virtual transfer of credits across multiple accounts to support the affordable housing solar program. 14
Net Surplus Compensation Net Surplus Generators Net energy metering customers who produce electricity in excess of their on-site load are eligible for compensation at the end of a 12- month true-up period (AB 920, 2006) The net surplus compensation rate is a rolling 12-month average of each utility s avoided cost derived from an hourly day-ahead electricity market price between the hours of 7am to 5pm, when most surplus generators produce electricity (D.11-06-016) Renewable Energy Credits (RECs) AB 920 stipulates that utilities will receive the renewable energy credits (RECs) associated with those excess kilowatt hours for which they have provided compensation to customers 15
Self-Generation Incentive Program SGIP provides incentives for DG technologies which have demonstrated a need for financial support in order to encourage customer adoption Goals of SGIP Reduce greenhouse gas emissions (SB 412 in 2009) Reduce peak load demand (historical goal from inception in 2001) Budget $83 Million program budget per year $77 Million for incentives, $6 Million for program administration Incentive budget split 75% for renewable/emerging and 25% for nonrenewable Budget Allocated across IOUs as % of electric and natural gas sales No new budget collection authorized after 12/31/2014 (AB 1150 in 2011) SGIP Program authorized through 2016 (AB 1150 in 2011) 16
SGIP Program Incentive Structure SGIP offers upfront incentives to offset the cost of capital investment Fuel Incentive ($/W) Renewable Fuels and Waste Heat Capture Wind n/a $1.25 Waste Heat or bottom cycle CHP n/a $1.25 Pressure Reduction Turbine n/a $1.25 Gas Turbine CHP Renewable $2.50 Microturbine CHP Renewable $2.50 IC Engine CHP Renewable $2.50 Non-Renewable fuels Gas Turbine CHP NG $0.50 Microturbine CHP NG $0.50 IC Engine CHP NG $0.50 Emerging technologies Advanced Energy Storage n/a $2.00 Fuel Cell CHP or electric only NG $2.25 Fuel Cell CHP or electric only Renewable $4.25 17 Date: September 26, 2011
Self-Generation Incentive Program History History: Originally designed in 2001 as a rebate program focused on larger projects to complement CEC s Emerging Renewables Program (ERP), which focused on similar technologies, but at a smaller scale. Started in response to energy crisis in 2001 SGIP Policy Developments: 9/2006: AB 2778 limits SGIP to fuel cells and wind 4/2008: D.08-04-049 raises 1MW cap on incentives to a tiered 3MW 9/2008: AB 2667 establishes 20% rebate incentive bonus for CA suppliers 1/2008: D.08-11-044 makes storage coupled with DG eligible for $2/W 1/2009: SB 412 extends SGIP to 2016 9/2011: D.11-09-015 Includes wind, fuel cells, gas turbines, micro-turbines and internal combustion engines, waste heat capture, CHP, energy storage, and pressure reduction turbines. 9/2011: AB 1150 extends SGIP annual collections through 2014 18
Wholesale DG: Overview of Programs 20+ MW Large-Scale Renewable RFO Annual Competitive RPS Solicitation (average project ~100 MW) Wholesale DG < 500 kw Renewable Auction Mechanism (RAM) 1,299 MW 4 auctions 2 yr. program Standard PPA Eligibility: 1-20 MW Baseload Peaking Non-Peaking Customer-Side DG Programs (e.g., CSI) IOU Solar Photovoltaic Programs 776 MW IOU-Specific Eligibility: Solar PV 1-20 MW SB 32 Feed-in-Tariff (Pending Implementation) 750 MW Re-MAT Pricing Mechanism < 3 MW AB 1969 Feed-in-Tariff (Existing) 250 MW MPR < 1.5 MW 19
Wholesale DG: Procurement Update Renewable Auction Mechanism: standard PPA, pay as bid - CPUC recently approved 13 contracts for 145 MW from 1 st auction - Weighted average price of approved contracts: ~ $90/MWh (post-tod) - 83% of contracted MWs were for Solar PV projects - 2 nd RAM Auction: closed May 31, 2012 Feed-in-Tariff: standard PPA at a fixed price - 179 MW contracted (as of Jan. 2012) under existing AB 1969 FiT - CPUC recently adopt new pricing mechanism and program rules for the FiT o Creates the Renewable Market Adjusting Tariff (Re-MAT) a market-based, volumetric price adjustment mechanism that operates independently for baseload, peaking, and non-peaking project types IOU Solar PV Programs: standard PPA, pay as bid - SDG&E (74 MW) and SCE (225 MW) moved MWs from PV Program into RAM - More than 200 MWs currently under contract 20
Thank you. Questions? 21 21