BILL ANALYSIS
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THIRD READING
Bill No: SB 1345
Author: Peace (D)
Amended: 5/30/00
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 8-0, 4/11/00
AYES: Bowen, Alarcon, Brulte, Hughes, Kelley, Peace,
Solis, Vasconcellos
NOT VOTING: Mountjoy, Murray, Speier
SENATE APPROPRIATIONS COMMITTEE : 13-0, 5/25/00
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Johnson,
Karnette, Kelley, Leslie, McPherson, Mountjoy, Perata,
Vasconcellos
SUBJECT : State Energy Commission: grant program: solar
energy systems
SOURCE : Author
DIGEST : This bill establishes a grant program to offset
a portion of the costs in solar and low-pollution
distributed generation systems.
ANALYSIS : Current federal law provides a credit equal to
10% of the cost of energy property placed in service during
a given tax year.
The California Constitution was amended in 1980 to clarify
that active solar energy systems would not be assessed as
"new construction" under Proposition 13's property tax
CONTINUED
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limitations.
This bill creates a grant program at the California Energy
Commission (CEC) to offset a portion of the cost of
eligible solar energy systems. The program is to
accomplish specified goals including making solar energy
systems cost competitive with alternate forms of energy.
The amount of each grant may be up to $750 and requires the
CEC to determine the size of the grant based on the
performance and type of system. The bill prohibits
duplicate grants from other grant programs administered by
the CEC for solar systems that produce electricity. The
grant program sunsets at the end of 2005.
This bill establishes a grant program to offset a portion
of the costs of eligible distributed generation (DG)
systems. This grant shall not exceed the lesser of 10% of
the cost of the system, or $2,000. The grant program
sunsets at the end of 2005.
This bill requires the California Public Utilities
Commission (CPUC) to develop appropriate interconnection
and safety requirements and operating agreements for
distributed generation technologies.
Background :
Existing law provides a variety of mechanisms to support
and encourage the development of solar energy programs,
including property tax exemptions for installation of solar
systems and grants for development and operation of some
solar generation technologies.
AB 1890 (Brulte), (Chapter 854, Statutes of 1996), provided
$540 million, collected over four years, to operate and
develop new, emerging and existing renewable resource
technologies. The CEC was charged with developing a
spending plan for these funds, as well as others dedicated
in AB 1890 for various public purpose programs. The CEC
spending plan was codified by SB 90 (Sher), (Chapter 905,
Statutes of 1997).
Under SB 90, the grid-connected photovoltaic segment of the
solar industry (which is potentially eligible for grants
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under this bill) is eligible to compete for 10% of the $540
million - the portion designated for new and emerging
technologies. Photovoltaics, or PV systems, include the
traditional panels and other types of receptors that take
in sunlight and provide electricity for residential and
industrial use.
Distributed generation (DG) is a growing industry that has
been receiving quite a bit of attention as the state's
energy needs continue to grow. With recent energy
shortages during peak demand periods, uncertainties about
the future competitive marketplace and new power plant
generation still two to three years from completion, DG
systems are reaching more and more commercial customers -
with residential systems in the advanced development
stages.
Distributed generation (DG) is small-scale production of
electricity at or near the point of use, as opposed to
central generation, where electricity is produced in large
quantities at a remote site and transmitted to multiple
users. DG systems range from photovoltaics and fuel cells
to gas turbines and diesel engines in residential,
commercial and industrial applications that can operate in
conjunction with, or independent of, the electricity grid.
Prior legislation :
This bill is similar to SB 655 (Peace) of 1999, which was
approved by this committee but vetoed by the Governor. The
Governor's veto message reads:
"While I am supportive of efforts to promote emerging
solar and distributed generation technologies, this
bill establishes a new grant program without
establishing the source or amount of funding. This
program, while important, should compete with other
priorities in the annual budget process."
This bill is also similar to SB 116 (Peace) of 1998, which
established a grant program for solar systems, but not
distributed generation systems. In addition, SB 116
reinstated a property tax exemption for the installation of
solar systems. SB 116 was vetoed by Governor Wilson, who
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objected to the grant program, stating a preference for
"fair and open market competition without government
subsidization of one particular industry." The property
tax exemption provisions of SB 116 were reinstated by AB
1755 (Keeley), (Chapter 855, Statutes of 1998).
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
The Senate Budget and Fiscal Review Committee is proposing
an appropriation of $1.7 million from the Energy Resources
Programs Account for the purposes of this bill. The bill
authorizes the CEC to spend $250,000 of the funds
appropriated for the program to fund its costs in
administering the program. Unknown costs for grants.
SUPPORT : (Verified 5/30/00)
California Manufactures & Technology Association
California Solar Energy Industries Association
Clean Power Campaign
ESDI, Inc.
Environmental Solar Design, Inc.
Goldline Electronic Controls
Heliocol Solar
Horizon Industries
Independent Power Providers
New Energy
Off Line Independent Energy Systems
Renewable Energy Concepts, Inc.
San Diego Regional Energy Office
Sierra Club
Solar Depot
Solar Roofs. Com
SUN Utility Network
USAN
Astro Power
Aztec Solar
California State Association of Electrical Workers
Environmental Defense Fund
Kyocere Solar, Inc.
Pacific Solar Company
Politico Group - National Electrical Contractors
Association
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Politico Group - California Legislative Conference of the
Plumbing, Heating
and Piping Industry
Science Application International Corporation
Sierra Pacific
Various individuals
NC:jk 5/30/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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