The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

California Approves Innovative Program to Spur Mid-Sized Solar

Last week the California Public Utilities Commission (CPUC) voted unanimously to approve a new program designed to drive small to mid-sized renewable energy development. Called a "Renewable Auction Mechanism" (RAM), this next-generation feed-in tariff program will require investor-owned California utilities to purchase electricity from solar and other renewable energy systems up to 20 MW in size.

Solar advocates and industry representatives applauded the CPUC for its innovative approach to helping California meet its renewable goals and build a strong new energy economy.

Full text of the proposed program can be found here (PDF). 

The Commission vote establishes a 1-gigawatt (GW) pilot program for power from eligible mid-sized renewable energy systems. The program 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. 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.

The RAM procurement model addresses many of the challenges facing wholesale renewable energy policy in California and around the world:

Small to Mid-Sized Project Size Expedites Solar Development

CPUC analysis identifies transmission as the single most significant barrier to development of large-scale renewable projects that have been the focus of much utility solar activity to date. While the state works out its transmission solutions, this proposed program stimulates immediate activity by establishing a market for smaller (up to 20 MW) renewable projects that can be incorporated into existing utility distribution infrastructure. These smaller projects will also likely be easier to finance, another critical hurdle in the current economic climate.

Market-Based Pricing Delivers Long-Term Value in a Dynamic Market

Some governments have used fixed-price feed-in tariffs to drive renewable energy development. One point of difficulty has been getting the fixed pricing right. If the price is set too low, it does not stimulate the desired level of market activity.  If the price is set too high, ratepayers pay unnecessary costs, suppliers throughout the value chain are not encouraged to reduce prices, and the program can lose political support. In contrast, the CPUC program uses competition to establish a price that is both sufficient for project development and protective of ratepayers. By continuing to deliver maximum ratepayer value by driving down installed solar costs and capturing changes in market conditions, the bidding mechanism is also more likely to provide a long-term market for the growing solar industry.  Instead of guaranteeing a price, this approach guarantees a market—providing necessary long-term certainty to developers.

Program Designed to Reduce Transaction Costs

Standardized contract terms and conditions level the playing field and reduce parasitic transaction costs associated with project development.  Multiple annual solicitations provide more continual access to selling opportunities.  And strong project viability criteria, including development security, reduce the problems associated with underbidding and speculative developers holding contracts but failing to deliver.  The program builds upon best practices to create a fluid, functional competitive renewable energy market.

Untitled Document

RELATED ARTICLES

Hybrid solar minigrid to power Tanzanian island village

Tildy Bayar

A hybrid solar photovoltaic-battery energy storage-diesel minigrid project aims to provide power for around 400 households in the remote island village of Lake Victoria (pictured) in Tanzania. 

World Moves Toward 100 Percent Renewable Energy – First Electricity, Then Heating/Cooling, and Finally Transportation

Junko Movellan, Correspondent The exclusive use of energy from renewable resources in at least one sector has now become a feasible goal for 8 countries. Diane Moss, Founding Director of Renewables 100 Policy Institute, discussed this remarkable develop...

Solar power growth impacting UK electricity sector

Diarmaid Williams

Q2 of 2015 saw a large increase in the generation of electricity from solar PV in the UK, with the growth having a significant impact on electricity market prices and other supply factors.

PACE Finance Opening Doors for C&I Solar In California

Susan Kraemer, Correspondent With its excellent renewable policy, California leads the nation in solar. Over the years both the Renewable Portfolio Standard and the California Solar Initiative drove utility scale and residential solar deployment. But w...
Rosalind manages media, member and donor relations for Vote Solar, a non-profit working to make solar energy a mainstream resource across the U.S. Prior to joining Vote Solar, Rosalind spent five years directing and implementing PR campaigns for a...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Grid-connected and Off-grid Photovoltaics

This training covers all aspects of planning, installation, maintenance,...

5th Annual Hydro Plant Maintenance

Join maintenance professionals to discuss the challenges in maintenance ...

2015 Green Energy Expo

Stop by and visit Canadian Solar at the Green Energy Expo in Mexico City!

COMPANY BLOGS

Prevailing At A Premium

As efficiency sales professionals, we’re often faced with situatio...

LSX rises with sustainable wine making in Mexico

his custom LSX solar canopy shades the upper deck organic gard...

Do Your Goals Match Your Values?

Before you set goals for your company or your personal work performance ...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS