BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 82XX - Murray Hearing Date:
July 10, 2001 S
As Amended: July 3, 2001 FISCAL B
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DESCRIPTION
Current law provides a number of incentives for the installation
of solar electric systems including:
1. allowing customers with solar electric
generating systems of up to 1 megawatt (MW) to
offset their electricity usage by selling the
generated electricity back into the electric grid at
the same price as the utility charges;
2. providing for a program to subsidize the
capital cost of solar electric systems by $4.50/watt
up to a maximum of 50% of the total system cost;
3. providing, in federal law, business taxpayers
with a 10% tax credit for solar electric systems and
accelerated depreciation.
Current law offers loan guarantees and other financial
assistance to small businesses unable to obtain conventional
commercial bank credit. Such loans and loan guarantees can be
made for various purposes, including energy efficiency
improvements.
This bill expands the definition of energy efficiency
improvement for purposes of the small business loan program to
include solar energy systems and specifies minimum and maximum
loan amounts.
Current law requires the Department of General Services (DGS) to
identify each public building in the department's inventory
where it is feasible for that building to reduce energy
consumption and produce its own onsite electrical generation,
and authorizes DGS to enter into appropriate agreements. DGS is
required to retrofit all public buildings where feasible.
This bill requires DGS, in consultation with the California
Energy Commission (CEC), to ensure that solar energy equipment
is installed on all existing state buildings and parking
facilities where feasible no later than January 1, 2007.
This bill requires that solar energy equipment be installed on
all new state buildings and parking facilities that break ground
on construction after December 31, 2002.
This bill requires the director of DGS to provide for an
expedited competitive bidding process, not to exceed 30 days,
for solar energy installations on state buildings that reduce
peak electric demand or help avoid electric shortages.
Current law provides $40 million for state energy projects,
defined as equipment and techniques that reduce energy
consumption and provide for more efficient use of energy in
state buildings or facilities.
This bill declares that solar energy equipment installations are
considered to be state energy projects which may be funded out
of the $40 million already provided for such purposes.
BACKGROUND
SB 5X (Sher), Chapter 7, Statutes of 2001, provided $40 million
to DGS to pay for state energy projects, which this bill defines
to include solar energy installations. Through January 1, 2003,
that legislation provides DGS with the authority to exempt state
energy projects from the state advertising and competitive
bidding requirements if it deems the exemption necessary to
reduce peak electricity demand and to adopt emergency
regulations for state energy projects. Furthermore, the
legislation provides the Department of Finance with the
authority to exempt state energy projects from the capital
outlay process through January 1, 2003.
California has been aggressive in promoting renewable energy
through several renewable energy programs administered by the
CEC and various tax credits over the years. Solar electric
systems have received special attention, though they represent a
very small percentage of overall generation (less than 0.3% of
total generation in 1999, a relatively stable number for that
entire decade) and only a fraction of renewable generation.
Solar electric systems aren't cost-effective except in remote
locations where the electric grid doesn't reach. Even with the
considerable public incentives provided for solar electric
applications, current residential applications have 8-10 year
paybacks. Nevertheless, the appeal of clean solar energy with
virtually no operating cost that's generated at peak times of
the day is unabated and undeniable.
COMMENTS
1)One Person's Feasibility Is Another Person's Impossibility .
This bill requires solar energy equipment to be installed as
part of all new state building and parking facilities after
December 31, 2002. Solar energy equipment must be installed
on all existing state buildings and parking facilities no
later than January 1, 2007 where feasible.
The cost of retrofitting existing buildings will be
substantial and may not make sense depending on the size,
location, orientation, age, and/or life expectancy of the
buildings. "Feasibility" is essentially defined in the bill as
adequate physical space for the facilities, but it doesn't
include any of the factors noted above, nor does it discuss
whether adequate funding is available or whether the equipment
is cost- effective. The author and committee may wish to
consider adding these qualifications to the definition of
"feasibility" to ensure the state isn't forced to install
solar equipment on buildings regardless of the cost or
effectiveness of the installation.
2)Show Me The Money . Funding for this program comes from a $40
million program for state energy projects provided in SB 5X.
Those projects include load shifting and energy efficiency
projects. To the extent that funding for state solar energy
projects takes away from funding for state energy efficiency
projects, there may be a net detriment to energy consumption,
defeating the purpose of the bill. The author and committee
may wish consider amending this provision so state energy
projects are prioritized based on cost effectiveness,
irrespective of whether the project deals with energy
efficiency, load shifting, or solar energy.
3)Hurry Up . The bill provides for an expedited competitive
bidding process, not to exceed 30 days, for projects to
install solar energy equipment that reduces peak electricity
demand or that helps to avoid electrical shortages. As noted
above, existing law provides substantial contracting
flexibility for implementing state energy projects. Given
this flexibility and the inability of this bill to affect
electric supply this summer, the author and committee may wish
to consider deleting the expedited competitive bidding process
from the bill.
4)Solar Water, Too? "Solar energy systems" are defined in the
bill to include solar electric generation and solar water
heating projects. While there may be some energy efficiency
benefits for solar water heating, it should be noted that
solar water heating is primarily a substitute for natural gas
water heating, not electric water heating. As such, the
author and committee may wish to consider removing the
references to solar water heating in the bill.
5)Related Legislation . SB 17XX (Brulte) provides for a tax
credit for large solar electric installations. This bill is
pending in the Assembly Revenue & Taxation Committee.
POSITIONS
Sponsor:
Author
Support:
California solar Energy Industries Association
Clean Power Campaign
Sierra Club California
Oppose:
None on file
Randy Chinn
SB 82XX Analysis
Hearing Date: July 10, 2001