The California Public Utilities Commission (CPUC) on Thursday voted unanimously to approve a new incentive program for small- to mid-sized renewable energy projects.
Called a “Renewable Auction Mechanism” (RAM), the program will require investor-owned California utilities to purchase electricity from solar and other renewable energy systems up to 20 megawatts (MW) in size.
While some solar advocates and industry representatives have praised the plan, which was proposed in August, others say its auction-based design has serious flaws that will keep it from launching a new wave of distributed generation projects in the state.
The Commission vote establishes a 1-gigawatt (GW) pilot program that requires California’s three largest investor owned utilities to hold biannual competitive auctions into which renewable developers can bid. Utilities must award contracts starting with the lowest cost viable project and moving up in price until the MW requirement is reached for that round.
CPUC says the program will use standard terms and conditions to lower transactional costs and provide the contractual transparency needed for effective financing. To ensure project viability and realistic pricing, the program requires development security and relatively short project development. Utilities must file implementation plans in the next 60 days, and the program is expected to be operational this spring.
Non-profit organization, Vote Solar, is one of the strong supporters. “This is an elegant program that will drive significant new development in small to mid-sized renewables in California. The approach builds on best-practices to deliver cost-effective solar on-line quickly, in a way that delivers sustained value to ratepayers,” said Adam Browning, Executive Director of Vote Solar.
Several solar companies also expressed their support of the new system, include Q-Cells North America (QCE.DE), Suntech America (NYSE: STP), and Solaria.
Craig Lewis, of the Feed-in Tariff (FIT) Coalition, outline three major concerns with the program in a comment posted to SB.com in August. He said the lack of a fixed price, a standard must-take contract, and guaranteed interconnection will make project development too risky and expensive, and contribute to the high failure rate for renewable energy projects in California.
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