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The California Energy Commission wrapped up its work for the year December 19 by approving guidelines for the state’s solar electric incentive programs, renewable energy and renewable portfolio standards guidebooks, and statewide energy efficiency targets. The commission approved guidelines for in-state solar electric incentive programs administered by the CEC, the California Public Utilities Commission, and local publicly owned utilities as mandated by SB 1. The guidelines establish minimum standards for obtaining ratepayer funding and promote energy efficiency improvements for high quality solar energy systems. The commission approved two types of incentives to achieve an overall 20 percent energy savings: performance-based incentives to be achieved over a five-year period, and expected performance-based incentives providing an upfront incentive based on hourly rates Publicly owned utilities called for more flexibility in implementing energy efficiency programs. They recommended removing the mandatory reporting requirement as redundant. California Green Designs which installs solar energy systems in Southern California warned that many municipal utilities lack performance-based incentive programs, including the Los Angeles Department of Water & Power, Burbank, Glendale, and Pasadena. The absence of performance-based incentives in LADWP’s service area could dissuade large commercial customers form going solar, they said. Commissioner John Geesman asked the CEC staff to talk with the Los Angeles utilities about their lack of performance-based incentives. “They wouldn’t want to be in an inferior position to Southern California Edison” which has a PBI for commercial solar electric customers, he said. “We need to focus our efforts on larger utilities to maximize the benefits.” Large customers that are investing $1 million in solar energy systems would prefer to have a performance-based incentive to improve their energy efficiency rather than be subjected to mandatory requirements by the Energy Commission, they said. SB 1 directed the Energy Commission to establish eligibility criteria, conditions for incentives, and standards for ratepayer-funded solar energy incentive programs in California by January 1, 2008. To qualify for the solar incentives applicants must install high efficiency solar energy systems that generate between 1 kW and 5 MW and make their power available during peak demand periods. SB 1 also requires energy efficiency improvements in residential and commercial buildings where solar energy systems are installed with the goal of fostering a self-sustaining solar electricity market while increasing energy efficiency in solar-powered buildings. To qualify for the solar energy incentives buildings must achieve 15 percent energy efficiency above state requirements. Energy audits will be required for older buildings. The Energy Commission’s guidelines establish minimum requirements for system design, equipment, testing, and installation to be met by program administrators by January 1, 2008 and provide for a 12-month transition period for full compliance by January 1, 2009. Public utilities must submit annual reports for their applications for solar energy incentives. The commission also adopted energy efficiency estimates and targets for California utilities, with a statewide goal of achieving 100 percent of cost-effective energy savings for electricity, peak demand, and natural gas usage. Assembly Bill 2021 requires the Energy Commission to identify all feasible and reliable energy efficiency savings and demand reduction for the next decade for both publicly-owned and investor-owned utilities and recommend annual savings targets. The CEC report evaluates the utilities’ proposed annual efficiency targets and discusses implementation by the Energy Commission, the CPUC, and the utilities. The report concluded that the utilities’ proposed targets would not achieve 100 percent of economically potential energy reductions and that some utilities would have difficulty capturing all cost-effective energy efficiency savings. The 100 percent statewide target is significantly higher than the utilities’ combined energy efficiency goals and exceeds the staff’s initial proposed target of 80 percent of economically potential energy savings statewide. The Energy Commission adopted the more aggressive 100 percent target in light of the urgent need to reduce energy consumption to help meet the state’s imperative to address climate change. The commission will assess the utilities’ progress in meeting their energy efficiency goals in its 2008/2009 Integrated Energy Policy Report as mandated by AB 2021. The Energy Commission also approved revisions to its Renewable Portfolio Standards Eligibility Guidebook to conform with the requirements of SB 1036 and AB 809, and address regulatory and market developments. The RPS requires retail electricity providers to increase the amount of renewables in their power supply by 1 percent each year until they achieve 20 percent renewables. The CEC guidebook outlines the requirements and process for certifying renewable resources as eligible for California’s renewables portfolio standard and describes the Energy Commission’s proposed accounting system to verify compliance. The revisions include: - eliminating supplemental energy payments; - requiring RPS participants to register with and use the Western Renewable Energy Generation Information System to verify renewables portfolio standard compliance; - modifying eligibility criteria for distributed generation facilities, multiple-fuel facilities, and small hydroelectric and hydroelectric conduit facilities; - requiring small hydro and conduit hydro projects to not cause adverse impacts on in-stream beneficial uses or stream flows; - clarifying that RPS eligible electricity may be delivered at different times and places; - adding eligibility criteria for incremental generation from efficiency improvements to hydroelectric facilities; - no longer requiring participants to renew the RPS certification for their projects every two years and clarifying that RPS approved facilities have lifetime eligibility. The commission also approved production incentive awards for existing renewable energy facilities to improve their cost competitiveness with fossil fuel power plants. The commission awarded production incentives to seven thermal energy projects operated by Luz Solar Partners with 5.37 cents/kWh eligibility for time of use incentive payments; Wheelabrator Shasta Energy Company with 5.8 cents/kWh eligibility; and Collins Pine Company with 6.54 cents/kWh eligibility. The funds will provide a platform to enable FPL Energy, which represents the Luz Solar Partners’ projects, to make investment decisions, said Diane Fellman FPL attorney. The energy company has invested $70 million this year in retooling Luz’ solar fields to stop degradation and increase their renewables portfolio standard output by 20 percent, she said. However, FPL is concerned about renewables portfolio standard funds being awarded to renewable projects that are already cost competitive, she said. “We see that our investment in our tubes is equivalent to what biomass projects receive for diesel, but our costs are more expensive.” In other action, the commission approved a $500,000 contract with the Cement Industry Environmental Consortium for a carbon capture research demonstration project using updated amine technology specifically suited for the cement industry. The contract under the commission’s Public Interest Energy Research program is set to co-fund the technology demonstration project for reducing CO2 emissions at a cement plant in Southern California. The project is believed to be the first of its kind to attempt carbon sequestration for the cement industry, said Michael Lozano, CEC project manager. Cement plants are a leading source of CO2 emissions, with California’s 11 cement plants producing 10 million tons of CO2 in 2006. On average cement plants produce one ton of CO2 per ton of cement produced, Lozano said. “When AB32 passed a lot of people said California will write off its cement industry,” Geesman said. “No one is suggesting we stop using cement. I’m concerned about driving the California cement industry offshore” with regulatory demands.

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