BILL ANALYSIS                                                                                                                                                                                                    

                                                                    SB 1345
                                                                    Page  1

          Date of Hearing:  June 19, 2000

                                 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  

          3)Creates a grant program through the CEC for up to $2000 to  


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            homebuilders or homeowners who install DG systems in their  

          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  


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          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.



          Astro Power
          Aztec Solar
          California Legislative Conference of the Plumbing Heating &  


                                                                    SB 1345
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          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.)
          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
          Sun Utility Network
          Several Individuals

          None on file.

           Analysis Prepared by  :  Kyra Emanuels / NAT. RES. / (916)