January 31, 2011
By Paul Gipe
The Louisiana Public Utility Commission (PUC) has ordered utilities in the state to implement an undifferentiated feed-in tariff for a limited contract term of five years.
Most feed-in tariff contracts worldwide are for terms of 20 years or longer. Spanish contracts are for 25 years with extensions at a reduced payment for even longer. Feed-in tariff contracts for hydro generation in Ontario are for 40 years.
Louisiana’s extremely short contract term may make the proposal moot as it will be nearly impossible to finance projects for such short periods at the low tariffs offered.
Of interest is the approach used to define the tariff, avoided cost plus a premium to represent the environmental attributes. The environmental benefits are valued at $0.03 per kWh.
Another novel element is passing the costs on to ratepayers through the fuel adjustment clause, an approach normally used for increases in the cost of fossil fuels.
In this case, the PUC’s “standard offer tariff” is truly a standard offer as the tariff is undifferentiated by size, technology, or resource intensity.
At the end of the five-year period, the tariff reverts to avoided cost.
Below is summary of the feed-in tariff’s key elements.
- Avoided cost plus $0.03 per kWh
- Limited by ceiling and floor prices
- Floor price: $0.06 per kWh
- Ceiling price: $0.12 per kWh
- Contract term: 5 years
- Program cap: 30 MW per utility
- Cost recovery through fuel adjustment charge
- Project size limit: 5 MW
- Minimum project size: 25 kW
Utilities may avoid offering any standard offer contracts by building three renewable energy projects themselves. Each of the three projects can be no more than 300 kW. One project of the three can be up to 5 MW in size.
1. Build 12,000 MWs of Localized Electricity Generation
- California should develop 12,000 megawatts of localized energy by 2020. Localized energy is onsite or small energy systems located close to where energy is consumed that can be constructed quickly (without new transmission lines) and typically without any environmental impact.
- Solar systems of up to 2 megawatts should be installed on the roofs of warehouses, parking lot structures, schools, and other commercial buildings throughout the state.
- Solar energy projects up to 20 megawatts in size should be built on public and private property throughout the state. For example, we should create the California Solar Highway by placing solar panels alongside our state highways.
- The California Public Utilities Commission (CPUC) or
Legislature should implement a system of carefully calibrated renewable power payments (commonly called feed in tariffs) for distributed generation projects up to 20 megawatts in size. Holding down overall rates must be part of the design.
2. Build 8,000 MWs of Large Scale
Renewables & Necessary Transmission Lines
The Legislature should codify a requirement that 33% of the state’s electricity be derived from renewable sources. This will create market certainty and drive investment in renewable technologies.
The California Energy Commission (CEC) should prepare a renewable energy plan by July 1, 2011, that will expedite permitting of the highest priority generation and transmission projects.
Federal and state agencies should carry out one integrated environmental review.
The CEC should “fast-track‟ projects based on their anticipated ability to deliver clean energy to market. The permitting time for these projects—which now can take 6 to 8 years—should be dramatically reduced, and in no case be longer than three years.
Work with regulators and utilities to develop and introduce Smart Grid technology to provide greater transmission efficiency, renewable energy and system reliability.
Renewable energy is being delayed because of overlapping review between the CEC and the Independent System Operator. Delays are also caused as various departments, such as Fish and Game and water quality agencies, weigh in on projects. As Governor, I will ensure that all agencies work together—with a sense of urgency—to permit projects and transmission lines without delay.
Pacific Gas and Electric Company (“PG&E”) intends to issue the 2011 Photovoltaic Program Power Purchase Agreement (“PV Program PPA”) Request for Offers (“RFO”) on February 2, 2011, subject to CPUC approval of a compliance filing required by the CPUC’s Resolution E-4368 which implements PG&E’s PV Program PPA RFO. The goal of this first round of the PV Program PPA RFO is to execute agreements with a 20-year term for up to 50 megawatts (“MW”) from new PV generating facilities.
To participate in the 2011 PV Program PPA RFO, Offers must meet the following eligibility criteria:
Notable DRAFT dates for this RFO are (all times are in Pacific Prevailing Time (“PPT”)):
Date (2011) Event
February 2: PG&E issues RFO
February 2, 5:00 P.M. PPT: Deadline for Participants to register for the Bidders’ Conference
February 8: Bidders’ Conference
March 2: 1:00 P.M. PPT Deadline for Participants to submit Offers
March 22: Deadline for Participants to provide proof that interconnection applications have been deemed complete and that their project has received a queue position.
April 15: PG&E notifies Participants of Selected Offers.
June 3: Participants with Selected Offers provide proof that interconnection screens have been passed or studies completed.
June 17: Execute final PPAs.
July 15: Target Advice Letter Filing for executed PPAs
PG&E expects that it may be difficult for projects to meet the interconnection milestones in this first round of the PV Program PPA RFO if those projects have not already submitted an interconnection application. PG&E will address this issue at the upcoming Bidders’ Conference, and encourages prospective Participants to attend the Bidders’ Conference to gain an understanding of both the RFO and interconnection application processes to increase the likelihood of successful participation in future rounds of the PV Program PPA RFO and other upcoming RFOs.
Draft solicitation documents can be viewed at http://www.pge.com/b2b/energysupply/wholesaleelectricsuppliersolicitation/PVRFO/. PG&E is in the process of updating these documents. Final documents will be available upon RFO issuance.
Pending the CPUC’s final decision, PG&E is planning to host the Bidders’ Conference on February 8, 2011. Due to space limitations, prospective attendees are required to register for the event by February 2, 2011 at 5:00 P.M. PPT by completing the registration form posted at http://www.pge.com/b2b/energysupply/wholesaleelectricsuppliersolicitation/PVRFO/
Please email questions regarding this RFO to PVProgram@pge.com.
- The Renewable Auction Mechanism, or RAM, is a simplified and market-based procurement mechanism for renewable distributed generation (DG) projects up to 20 MW on the system side of the meter. The Commission adopted RAM as the primary procurement tool for system-side renewable DG because it will promote competition, elicit the lowest costs for ratepayers, encourage the development of resources that can utilize existing transmission and distribution infrastructure, and contribute to RPS goals in the near term.
To begin the program, the Commission authorized the utilities to procure 1,000 megawatts through RAM. Going forward, the capacity authorization will reflect each utility’s need for system-side DG under 20 MW.
- RAM is a unique program because it streamlines the procurement process for developers, utilities, and regulators. It allows bidders to set their own price, provides a simple standard contract for each utility, and allows all projects to be submitted to the CPUC through an expedited regulatory review process.
- A detailed summary of the program can be found in Appendix A of the RAM Decision (D.10-12-048)
Washington, DC, USA — In an unprecedented move U.S. President Barack Obama put clean energy front and center on the agenda of the American government — calling for an 80% clean energy target by 2035.
In his yearly State of the Union address to the nation’s lawmakers, Obama said that it is time for America to invest in the energy of the future and stop supporting the energy of the past. He called on Congress to remove all subsidies for fossil fuels and to reinvest the money saved into clean energy initiatives.
The President said that he hopes America can obtain 80% of its energy from clean sources by 2035, the most aggressive target ever set forth by a president. While renewable energy supporters were thrilled with the bold target, they were reminded during the speech that Obama’s idea of clean energy is broad: His target includes nuclear energy, clean coal and natural gas, in addition to traditional renewables like wind, solar, biomass, geothermal and hydro.
“Some folks want wind and solar. Others want nuclear, clean coal, and natural gas,” he said. “To meet this goal, we will need them all – and I urge Democrats and Republicans to work together to make it happen.”