Renewables Supplier Remains Credit Owner

By Published On: December 8, 2006

Under a proposed decision by the California Public Utilities Commission issued December 6, the green attribute of a solar, wind, or other renewable power system is possessed by the project owner. The issue of who owns the renewable energy credit – which is considered separate and apart from the resource’s power output and capacity – has been a source of controversy among utilities and owners of renewables projects for years. Currently, an investor-owned utility does not get the renewables credit unless the project owner sells it to the company. “Renewable energy credits are among several factors that may affect the economics of solar and other renewable distributed generation facilities, and may play an important role in driving the deployment of distributed generation in California and advance the goals of SB 1,” states the proposed ruling by CPUC administrative law judge Maryam Ebke. SB 1 is the Million Solar Roofs law that subsidizes photovoltaic and other solar energy installations. The commission proposal considered splitting the renewables credits between the project owner and the utility that receives the electricity. However, it rejected that idea because tracking and accounting would be too complex. Thus, utilities will continue to be prohibited from counting the renewables supplies toward their renewables portfolio standards that receive ratepayer subsidies. The draft ruling also weighed passing the benefit of the renewable energy credit to ratepayers as urged by utilities and consumer advocates. That’s because ratepayers are subsidizing part of the cost of renewable energy installations through the CPUC’s Self-Generation Incentive Program (SGIP) and the $2.8 billion regulatory California Solar Initiative (CSI) programs. The proposed decision concludes that the commission’s top priority is to attain 3,000 MW of new solar power and to create a self-sustaining program. Keeping the renewables credit attached to the renewables unit is seen as helping advance that goal. Ebke noted that there was, however, little information about the economic value of renewables credits. It was also unclear what the ratepayer subsidy was aimed at promoting: more power, capacity, or renewable attributes. “At some point it may be reasonable to adjust the CSI and SGIP incentives to reflect the realities of the market, including the benefit systems owners may derive from RECs,” reasoned Ebke. – Elizabeth McCarthy

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