The following is a contributed article by Ed Smeloff, Senior Director of Grid Integration at Vote Solar.
Community-scale renewable energy projects in California could get a much needed boost as the state’s energy regulator updates its compliance with the federal Public Utility Regulatory Policy Act (PURPA) and considers restarting a long-stalled feed-in tariff program.
Over two years ago, a federal court found that California was not in compliance with a forty year-old federal law that requires utilities to contract with owners of qualified renewable energy projects at prices equal to or lower than the utilities’ avoided costs. The court told the California Public Utilities Commission (CPUC) to go back to the drawing board on implementing PURPA and come up with fixed prices based on avoided costs that would last for the duration of a standard contract term.
After two years of deliberations, it is now time for the CPUC to add a new standard offer contract for qualified power plant developers that provides up-front energy prices that will stay in place for up to 12 years, and to re-start the successful program that was temporarily suspended for small renewable projects under 3 MW.
When the federal court made its PURPA ruling it also ordered the CPUC to suspend a popular feed-in tariff program that was originally established in 2006 and modeled after what was a very successful solar policy in Germany. In 2012, this feed-in tariff program evolved into what is now called the Renewable Market-Adjusting Tariff (ReMAT), a program that authorizes utilities to periodically enter into long term contracts for renewable energy projects up to 3 MW in size.
The ReMAT program was designed to make periodic adjustments (typically downward) to the pricing for new contracts based on an assessment of the market. The original feed-in tariff program and its ReMAT successor have stimulated the development of just over 250 MW of community-scale renewables over the past decade.
Community-scale renewable potential
This amount is quite modest in comparison with the technical and economic potential for smaller scale renewables. When the program was suddenly suspended in December 2017 it left numerous renewable energy projects in limbo and created uncertainty about the future of community-scale renewable energy projects in California.
Once the new PURPA compliant program is adopted by the CPUC, the Commission or its staff need to expeditiously re-start the ReMAT program. The Commission should also consider increasing the cap on the number of megawatts that can be developed.
California has been very successful in promoting the development of both large-scale renewable energy projects connected to the high voltage transmission system and behind-the-meter customer-owned systems sized for self-consumption. What has been missing is the implementation of community-scale renewable projects connected to the distribution system. New inverter and plant control technologies are making this a more attractive option for reducing greenhouse gas emissions, reducing dependence on local fossil fuel power plants and making the distribution grid more reliable and resilient.
In 2012, then Governor Jerry Brown, D, set a goal of having 12,000 MW of distributed generation in place by 2020. California has fallen well short of meeting this goal, in part due to its failure to implement PURPA effectively. Community-scale renewables, together with battery storage, can be located in or near urbanized areas on already-disturbed land, in large parking lots or on warehouse roofs. These smaller systems can be interconnected at distribution system voltage and make better use of existing infrastructure.
A 3 MW solar project with storage can easily fit on large warehouses near airports or on otherwise unusable land. Larger projects of up to 20 MW can be developed near distribution substations and used to improve much-needed community resilience as we face the ongoing threat of wildfires.
California’s policymakers have long been aware of the potential for community-scale renewables and have tried to promote their development through procedures like Distribution Resources Planning. That planning process has helped project developers better understand the capabilities and future needs of the distribution grid, but has not resulted in much new procurement.
The upcoming decision of the CPUC on PURPA compliance with a new standard offer contract for renewable generators and the opportunity for revitalization of the ReMAT program can offer California a long-needed, predictable and sustainable path for the development of community-scale renewables.