BILL ANALYSIS AB 1685 Page 1 Date of Hearing: April 21, 2003 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Sarah Reyes, Chair AB 1685 (Leno) - As Amended: April 10, 2003 SUBJECT : Energy: self generation incentive program. SUMMARY : Requires the California Public Utilities Commission (PUC) in consultation with the State Energy Resources Conservation and Development Commission to administer a self-generation incentive program for solar electricity generation until January 1, 2017. Specifically, this bill : 1)Requires PUC in consultation with the State Energy Resources Conservation and Development Commission to administer a self-generation incentive program for solar electricity generation. 2)Requires the program to continue until January 1, 2017 in the same form as it exists on January 1, 2004. EXISTING LAW : 1)Requires PUC to develop an incentive program to encourage customers of investor-owned utilities to install distributed generation, which operates on renewable fuel or contributes to system reliability. 2)Establishes the self generation incentive program to provide incentives for customers of Pacific Gas and Electric (PG&E), Southern California Edison (Edison), San Diego Gas & Electric (SDG&E) and Southern California Gas Company (SoCalGas) to install photovoltaics, wind turbines, fuel cells, microturbines, small gas turbines, and internal combustion engines to provide some or all of their electricity for onsite use. FISCAL EFFECT : Unknown. COMMENTS : The purpose of this bill : According to the author AB 1685 re-authorizes a very successful program that would otherwise AB 1685 Page 2 expire at the end of 2004. California has everything to gain from the continued growth of solar and other renewable energy technologies - clean air, new jobs and increased energy independence. Self-Generation Incentive Program : AB 970, signed by the Governor on September 6, 2000, required PUC to initiate certain load control and distributed generation activities, including providing financial incentives. PUC decision 01-03-073 authorizes the Self-Generation Inventive Program, and allocated $125 million per year through 2004 for program administration and customer incentives. Technologies eligible to receive incentive payments under the program are photovoltaics, wind turbines, fuel cells, internal combustion engines, small gas turbines and microturbines. The program has three categories of incentive payments and maximum incentive and system size limits: ----------------------------------------------------------------- |Incentiv|Incentiv| Maximum |Minimum | Maximum | Eligible | | e | e |percentage| system | system | technologies | |category|offered | of | size | size | | | | | project | | | | | | | cost | | | | |--------+--------+----------+--------+---------+-----------------| |Level 1 |$4.50/Wa|50 |30 kW |1 MW |Photovoltaics, | | |tt |percent | | |fuel cells | | | | | | |operating on | | | | | | |renewable fuel, | | | | | | |wind turbines | |--------+--------+----------+--------+---------+-----------------| |Level 2 |$2.50/Wa|40 |None |1 MW |Fuel cells | | |tt |percent | | |operating on | | | | | | |nonrenewable | | | | | | |fuel and | | | | | | |utilizing | | | | | | |sufficient waste | | | | | | |heat recovery | |--------+--------+----------+--------+---------+-----------------| |Level 3 |$1.00/Wa|30 |None |1 MW |Microturbines, | | |tt |percent | | |internal | | | | | | |combustion | | | | | | |engines and | AB 1685 Page 3 | | | | | |small gas | | | | | | |turbines | | | | | | |utilizing | | | | | | |sufficient waste | | | | | | |heat recovery | | | | | | |and meeting | | | | | | |reliability | | | | | | |criteria | ----------------------------------------------------------------- The Self-Generation Incentive Program provides incentive funding to renewable and non-renewable self-generation unites up to 1 MW in size. PG&E, SCE, SoCalGas, and the San Diego Regional Energy Office (serving SDG&E customers) administer the program throughout their respective service territories. Most of the applicants seem to be in photovoltaics : The PUC November 2002 status report on the Self-Generation Incentive Program showed that there were 248 total applicants in 2002, of which 145 applicants were in photovoltaics technology but applicants in internal combustion engine technology produced twice as many kilowatts with half as many applicants. Committee recommendation on changing the sunset date : This bill currently requires the program to continue until January 1, 2017. The committee recommendation is to instead have this bill sunset on January 1, 2008 so that the incentive program can be reviewed at that time to determine whether it is worthwhile to continue with it or focus instead on other areas of technology. REGISTERED SUPPORT / OPPOSITION : Support Shell Solar Industries Light Energy Systems POCO Solar Energy Six Rivers Solar SoCal Solar Energy Performance Solar Inc. AMECO EcoEnergies Opposition AB 1685 Page 4 None on file. Analysis Prepared by : Daniel Kim / U. & C. / (916) 319-2083