BILL ANALYSIS SB 1345 Page 1 Date of Hearing: June 19, 2000 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Howard Wayne, Chair SB 1345 ( Peace) - As Amended: May 30, 2000 SENATE VOTE : 39-0 SUBJECT : California Energy Commission: grant program. SUMMARY : This bill revises the definition of solar energy system and implements a new grant program through the California Energy Commission (CEC) to offset a portion of the costs of solar energy systems and Distributed Generation (DG) systems. EXISTING LAW : 1)Pursuant to the Federal Internal Revenue Code, provides credit equal to 10% of the cost of energy property placed in service during a given tax year. 2)Pursuant to the California Constitution, provides that active solar energy systems are not assessed as "new construction" for purposes of assessing State property tax. 3)Defines solar energy system as any solar collector, other solar energy device or structural design feature whose primary purpose is to provide for the collection, storage, and distribution of solar energy for space heating or cooling, or for water heating. 4)Requires the CEC to expand and accelerate development of alternate sources of energy, including solar resources. THIS BILL : 1)Revises the definition of "solar energy system" to add DG to the definition. 2)Creates a grant program through the CEC to provide grants of up to $750 to homebuilders or homeowners who install thermal solar systems or specified photovoltaic solar systems in their homes. 3)Creates a grant program through the CEC for up to $2000 to SB 1345 Page 2 homebuilders or homeowners who install DG systems in their homes. 4)Requires the Public Utilities Commission (PUC) to establish operational and safety standards for DG systems installed under the grant program. FISCAL EFFECT : According to the Senate Appropriations Committee this bill would incur costs of $250,000 in the initial year and $400,000 in ongoing years. $1.5 million in funding for this program has been approved in this year's budget in the Energy Resources Programs Account. COMMENTS : 1)Solar Water Heaters According to the sponsors of the bill, existing law enacted by the passage of AB 1890, Chapter 854, Statues of 1996 (Brulte) and SB 90 Chapter 905, Statutes of 1997 (Sher) establishes measures designed to increase the usage of photovoltaic technologies through the Emerging Renewables program now being administered by the CEC. However, small scale solar thermal technologies were not addressed in these bills. This bill would establish parallel, but smaller incentives for small-scale solar thermal technologies used in water heating applications, with a focus on new residential construction. In recent years, solar water heating technologies have become nearly cost-competitive with comparable natural gas systems. However new homebuilders have been reluctant to include solar water heaters in homes because new homebuyers typically do not ask for solar systems. SB 1345 would create incentives for the instillation of thermal solar systems by providing grants to homebuilders or homeowners for up to $750.00 per grant. The grant program would also allow for photovoltaic battery pack systems to be eligible under the grant program. 2)DG systems In addition to thermal solar systems, AB 1890 (Brulte) also did SB 1345 Page 3 not provide incentives for DG systems. Unlike solar systems, DG systems allow the user, through a variety of means (microgeneration, wind turbines, gas turbines, fuel cells, solar dish stirling engines, and reciprocal internal combustion engines) to provide short term energy that does not rely upon traditional means of obtaining energy. Most often, DG systems are used by facilities like hospitals, which cannot afford to be without electricity even if the more traditional systems have a break in service. According to the author's office, this bill is intended to encourage homeowners to install environmentally superior electric systems to achieve self-reliance, thereby improving overall system reliability and environmental quality and reducing the need for upgrades to the public electric systems. Like the solar thermal systems, this bill would also provide a grant program for up to $2000 per grant to homebuilders or homeowners who wish to install DG systems, thereby allowing themselves to be completely self-sufficient in the event of electricity system outages. The DG systems eligible under this bill would be required to meet the same emission standards as central station power plants. In addition, the bill would require the PUC to establish operation and safety standards for DG systems. 3) Similar Legislation This bill is similar to SB 655 (Peace) which was vetoed by the Governor. In his veto message the Governor noted that while he was supportive of efforts to promote emerging solar and distributed generation technologies, the bill did not have any funding attached to the programs. SB 1345 has $1.5 million in funding provided for it in this year's budget. REGISTERED SUPPORT / OPPOSITION : Support Astro Power Aztec Solar California Legislative Conference of the Plumbing Heating & SB 1345 Page 4 Piping Industry California Solar Industries Association (CAL SEIA) California State Association of Electrical Workers Clean Power Campaign Environmental Defense Fund Environmental Solar Design, Inc. ESDI, Inc. Goldline Electronic Controls (Independent Energy, Inc.) Helicol Horizon Industries Independent Power Providers Kyocera Solar, Inc. Off Line, Independent Energy Systems National Electric Contractors Association Pacific Solar Company Renewable Energy Concepts Sacramento Municipal Utility District San Diego Regional Energy Office Science Applications International Corporation Sierra Club California Sierra Pacific Solar Depot - Sacramento Solar Depot - Photovoltaic Power Systems Solar Roofs.com Sun Utility Network USAN Several Individuals Opposition None on file. Analysis Prepared by : Kyra Emanuels / NAT. RES. / (916) 319-2092