BILL ANALYSIS
SB 1345
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Date of Hearing: July 6, 2000
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
SB 1345 (Peace) - As Amended: June 20, 2000
SENATE VOTE : 39-0
SUBJECT : State Energy Resources Conservation and Development
Commission: grant program: solar energy systems.
SUMMARY : Establishes a grant program to offset a portion of the
costs of solar and distributed generation systems, contingent on
funding in the Budget Act. Specifically, this bill :
1)Creates a grant program at the California Energy Commission
(CEC) to provide grants of up to $750 to homeowners and
homebuilders who install thermal solar systems or specified
photovoltaic solar systems in their homes.
2)Requires CEC to determine the size of the grant based on the
performance and type of system.
3)Revises the definition of "solar energy system" to include any
solar collector or other solar energy device whose primary
purpose is to provide for electricity generation, or any
structural design feature of a building whose primary purpose
is to provide electricity generation.
4)Creates a grant program at CEC for up to $2,000 to
homebuilders and homeowners who install distributed generation
(DG).
5)Provides that both grant programs sunset at the end of 2005.
6)Requires the California Public Utilities Commission (CPUC) to
establish appropriate interconnection and safety requirements
and operating agreements for distributed generation.
7)Requires CPUC to establish fair and reasonable standby rates.
8)Makes related findings and declarations.
EXISTING LAW :
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1)Pursuant to the California Constitution, provides that active
solar energy systems are not assessed as "new construction"
for purposes of assessing state property tax.
2)Defines "solar energy system," for purposes of provisions
governing property rights, to mean any solar collector or
other solar energy device whose primary purpose is to provide
for the collection, storage, and distribution of solar energy
for space heating or cooling, or for water heating, or any
structural design feature of a building, whose primary purpose
is to provide for the collection, storage, and distribution of
solar energy for space heating or cooling, or for water
heating.
3)Requires CEC to expand and accelerate development of
alternative sources of energy, including solar resources.
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)This bill is designed to encourage installation of solar and
distributed generation systems. Solar systems would be
eligible for up to $750 and distributed generation systems
would be eligible for 10 percent of their costs up to $2,000.
The grants would be based on the performance of, or the type
of, the system, as determined by CEC.
2)Existing law provides incentives to help support renewable
electricity generation and develop a renewable market. AB
1890 (Brulte), Chapter 854, Statutes of 1996 and SB 90 (Sher),
Chapter 905, Statutes 1997 established measures designed to
increase the use of solar photovoltaic (PV) technologies
through the Emerging Renewables program administered by CEC.
Small-scale solar thermal technologies were not addressed in
these bills. This bill would establish parallel, but smaller
incentives for small-scale thermal technologies used in water
heating applications, with a focus on residential
construction. Additionally, qualified PV battery pack systems
and distributed generation systems would also be eligible for
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grants under this bill.
3)Small-Scale Solar Thermal Technologies . Solar water heating
technologies are nearly cost-competitive with natural gas
water heaters. Research conducted by the National Association
of Homebuilders Research Center indicates that when solar
water heaters are offered to homebuyers, a substantial portion
elect to purchase them. According to the author, this bill
would jump start the new construction segment of the solar
industry, while also providing substantial environmental
benefits. Solar water heaters reduce the consumption of
natural gas and electricity, while simultaneously reducing the
emissions of nitrous oxides and carbon dioxide. According to
federal estimates, in most cases (except in households with
more than eight persons) a solar water heater installed in a
home reduces carbon dioxide emissions by at least 50 percent.
4)PV Battery Pack Systems . This bill would also provide
incentives for the addition of battery storage to
grid-connected PV systems, which would enable these systems to
operate independently of the electricity grid. Without
battery backup, PV systems become inoperable in the event of
an electrical outage. This bill would provide a modest
incentive to install such backup capability, thereby allowing
greater grid independence and improving system reliability.
5)Distributed Generation . Generally defined as a plant of 20
megawatts (MW) or less located in or close to a load center or
on a customer's premises that produces electricity at
distribution system voltage, distributed generation includes
the following technologies: microgeneration, wind turbines,
gas turbines, fuel cells, solar dish stirling engines, and
reciprocal internal combustion engines. Under this bill,
distributed generation systems would be eligible for 10
percent of their costs up to $2,000, and would be required to
meet the same emission standards as central station power
plants. Additionally, CPUC would be required under this bill
to establish interconnection and safety requirements, and
operating agreements, as well as fair and reasonable standby
rates for distributed generation end-users.
6)Recent Headlines Underscore the Need for New Generation, and a
Reliable Electric Grid . AB 1890 established a competitive
electric generation market. The reliability of the electric
grid depends on an adequate supply of new generation, but
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since the enactment of AB 1890, demand growth has outpaced new
generation additions. (Three new "merchant" plants are
projected to come on-line late next summer, in 2001). The
California Independent System Operator, which manages the
state's transmission grid and ensures system reliability, has
issued numerous "alerts" in recent weeks and curtailed power
to non-firm, or interruptible, customers on numerous occasions
to maintain system reliability in light of the high demand and
generation shortfalls. A number of electrical outages have
occurred as well. The purpose of this bill, according to the
author, is to encourage end-users to install environmentally
superior generation systems to meet onsite load and thereby
improve system reliability and environmental quality by
reducing system load and reducing the need for new
distribution system investments.
7)Prior Legislation, and the 2000-2001 State Budget . This bill
is similar to SB 655 (Peace), which was approved by this
committee but subsequently vetoed by Governor Davis. In his
veto message, the governor expressed support of efforts to
promote emerging solar and distributed generation
technologies, but expressed concern that the bill established
a new grant program without establishing the source or amount
of funding. The recently enacted State Budget, signed into
law last week, includes a $1 million appropriation for solar
and distributed generation technologies. The funds come from
the Energy Resources Program Account.
REGISTERED SUPPORT / OPPOSITION :
Support
AstroPower
Aztec Solar
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.
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Off Line, Independent Energy Systems
Pacific Solar Company
Plug Power Inc.
Politico Group - National Electrical Contractors Association
Politico Group - California Legislative Conference of the
Plumbing Heating & Piping Industry
Renewable Energy Concepts (REC)
Sacramento Municipal Utility District (SMUD)
San Diego Regional Energy Office
Science Applications International Corporation (SAIC)
Sierra Club California
Sierra Pacific
Sempra Energy
Solar Depot - Sacramento
Solar Depot - Photovoltaic Power Systems
Solar Roofs.com
Southern California Edison
Sun Utility Network
USAN
3 constituents
Opposition
None on file
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083