In an attempt to manage gaming a renewables subsidy system, California Energy Commission staff announced potential changes to a program that\u2019s in some cases provided rebates and incentives to companies installing wind and fuel cell technology that were too generous. The two biggest possible changes to the Emerging Renewables Program revealed Aug. 3 were reducing rebates to a maximum of 50 percent of an energy system\u2019s net purchase price and withholding a percentage of rebate payments until a report is made on the performance of the newly-installed system. Even with the rebate cap, government subsidies may over-cover the cost of systems. \u201cIt was never the intent of the ERP program to provide incentives that covered 100 percent of the rebate,\u201d Anthony Ng, an associate energy specialist in the commission\u2019s renewable energy office, explained. \u201cAnd so the 50 percent cap is an attempt to address that issue.\u201d When staff looked at historically how much of the total cost an ERP rebate covered, the average was 45 percent, Ng said, which is how the 50 percent number was arrived at. The ERP, launched in March 1998, is designed to incentivize the development of small renewable energy generating systems, like those typically used by small commercial and agricultural customers. The program is funded through $135 million collected annually from the ratepayers of California\u2019s three biggest investor-owned utilities, Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison. Its main focus is increasing the number of renewable energy resources in the state, plus supporting emerging small wind and fuel cell technologies believed to have the greatest near-term commercial promise. Applicants for funding from the ERP must submit a reservation request describing the system they\u2019re purchasing. The system must include equipment on the list of certified equipment established by the Energy Commission. The idea of changing the incentives came about during a reevaluation of the program, which was suspended in March amid a significant increase in applications where applicants requested rebate amounts close to or equal to a system\u2019s total installed cost. The program, which provides rebates and production incentives to consumers who buy and install renewable energy technologies for on-site generation--specifically small wind systems and fuel cells--was designed to cover just a portion of the cost of a renewable system. Staff proposes payment installments, with 90 percent of the rebate up front and the remainder held until verification is received that the system\u2019s up and running. Another potential change to the program\u2019s guidelines includes requiring products of manufacturers to receive third-party certification in order to be placed on or remain on the list of eligible small wind turbines. Going forward, manufacturers requesting to place wind equipment on the list would no longer be allowed to receive incentives by just providing 12 months of equipment performance data. \u201cAdopting these standards put the ERP and the California small wind program in line with a lot of other small wind programs throughout the country, including those in New York, Oregon, and Massachusetts,\u201d Ng said. The potential regulation\u2019s also related to an ongoing situation with wind turbine company DyoCore. On July 26, the commission filed a letter of complaint with the company accusing it of \u201cgrossly overstating\u201d the performance of one of its wind turbines that appears on the program\u2019s list of eligible equipment. DyoCore founder David Raine calls the allegations \u201cmisleading\u201d and \u201cfalse.\u201d A formal investigation into the matter is still ongoing. Representatives from renewable energy companies and equipment manufacturers weighed in on the proposed regulations. Some said the 50 percent cap and divided rebate installation payments were punitive to California-based companies and suggested a 75 percent cap. Mickey Oros, senior vice president of business development for Folsom-based fuel cell manufacturer Altergy Systems suggested that instead of a 50 percent hard cap, that a sliding cap be put in place in 2012. \u201cWhat we mean by that is starting out with 75 (percent), moving to 70, 60 as time progresses\u201d and production volumes rise and manufacturing costs decrease, he said. However, Mike Bergey, president of Bergey Windpower and the Distributed Wind Energy Association, spoke in favor of both the potential regulations. \u201cFuel cells and small wind turbines have a 30 percent federal tax credit,\u201d he said. \u201cIf you allowed a 75 percent limit, you\u2019d have a 105 percent possible subsidy, and that\u2019s too high in our opinion.\u201d Ng said the Energy Commission board is expected to consider whether to adopt the changes later this year.