BILL ANALYSIS SB 1345 Page 1 SENATE THIRD READING SB 1345 (Peace) As Amended August 25, 2000 Majority vote SENATE VOTE :39-0 NATURAL RESOURCES 11-0 UTILITIES AND COMMERCE 9-1 ----------------------------------------------------------------- |Ayes:|Wayne, Aanestad, |Ayes:|Wright, Pescetti, | | |Dickerson, Jackson, | |Calderon, Cardenas, | | |Keeley, Lowenthal, | |Frusetta, Mazzoni, Reyes, | | |Machado, Migden, Oller, | |Vincent, Wesson | | |Robert Pacheco, Steinberg | | | | | | | | |-----+--------------------------+-----+--------------------------| | | |Nays:|Maddox | | | | | | ----------------------------------------------------------------- APPROPRIATIONS 20-0 ----------------------------------------------------------------- |Ayes:|Migden, Campbell, | | | | |Ackerman, Alquist, | | | | |Aroner, Ashburn, Brewer, | | | | |Cedillo, Corbett, Davis, | | | | |Kuehl, Maldonado, Papan, | | | | |Romero, Shelley, Thomson, | | | | |Wesson, Wiggins, Wright, | | | | |Zettel | | | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : 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. Specifically, this bill : 1)Revises the definition of "solar energy system" to add DG to the definition. 2)Defines "distributed generation" as any onsite generation interconnected and operating in parallel with the electricity grid, that is used solely to meet onsite electrical load. SB 1345 Page 2 3)Creates a grant program through 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. 4)Creates a grant program through CEC for up to $2,000 to homebuilders or homeowners who install DG systems in their homes. 5)Requires the California Public Utilities Commission (CPUC) to establish operational and safety standards for DG systems installed under the grant program. 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 CEC to expand and accelerate development of alternate sources of energy, including solar resources. FISCAL EFFECT : According to the Assembly Appropriations Committee analysis, one-time special fund costs of $180,000 to develop performance standards for the various distributed generation technologies and development and administrative costs of up to $250,000 annually for three staff positions. Additionally, the current Budget has $1.5 million in funding for this program. COMMENTS : According to the sponsors of this bill, existing law enacted by the passage of AB 1890 (Brulte), Chapter 854, Statutes of 1996 and SB 90 (Sher), Chapter 905, Statutes of 1997, established measures designed to increase the usage of photovoltaic technologies through the Emerging Renewables SB 1345 Page 3 program now being administered by 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. This bill creates incentives for the instillation of thermal solar systems by providing grants to homebuilders or homeowners for up to $750 per grant. The grant program would also allow for photovoltaic battery pack systems to be eligible under the grant program. In addition to thermal solar systems, AB 1890 also did not provide incentives for DG systems. Unlike solar systems, DG systems allow the user, through a variety of means (i.e., 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. The DG systems eligible under this bill would be required to meet the same emission standards as central station power plants. In addition, this bill would require the CPUC to establish operation and safety standards for DG systems. 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. Analysis Prepared by : Kyra Emanuels / NAT. RES. / (916) 319-2092 FN: 0006436