Monday, November 13, 2006

California Debates Ownership of Solar Renewable Energy Certificates

by Stephen Lacey,
San Franciso, California []

November 12, 2006

A California Public Utilities Commission (CPUC) proposed decision to grant 100% ownership of solar renewable energy certificates (SRECs) to utilities from solar system owners could hamper the California Solar Initiative (CSI) and slow down the state's burgeoning solar market, according to solar advocacy groups.

"If RECs go to the utilities, it is going to eliminate a very important revenue stream that can help make more projects possible."

-- David Hochschild, Executive Director of PV Now

But California utilities disagree, saying that it will encourage more utility participation in the solar program if they own SRECs and RECs from other renewable distributed generation (DG) facilities. The difference of opinion between solar groups and utilities is just one of many issues that need to be sorted out before implementation of the CSI on January 1, 2007.

David Hochschild, Executive Director of PV Now, said that utilities have no right to take 100% of SRECs from their customers. "If RECs go to the utilities, it is going to eliminate a very important revenue stream that can help make more projects possible," he said. "If they go to customers it's going to grow the solar market and everyone is going to benefit."

PV Now has partnered with the Vote Solar Initiative and the California Solar Energy Industries Association (CALSEIA) to oppose any ruling that takes RECs from solar system owners. According to these three organizations, there are many reasons for keeping RECs in the hands of the customer.

Firstly, ratepayers will benefit as more solar installations reduce load, therefore reducing the renewable energy procurement obligations of the utilities. According to Hochschild in a letter to CPUC President Michael Peevey, "every MWh of load reduction reduces RPS [renewable portfolio standard] procurement obligations by 33%." The goal of the California RPS is to get 20% of electricity from renewable resources by 2010.

Also, if only 30% of a solar system's cost is paid for by the state through rebates, utilities should not be able to claim 100% ownership of the energy generated. The government doesn't claim it owns the energy and neither should the utilities, the three parties said.

And finally, system owners will not be able to legally say they are solar powered if utilities claim ownership of the energy. RECs are the value of generated clean energy, so if they are not the property of the system owner, it can't be said that a building is solar powered. If companies cannot use this claim for their public image, it could affect their decision to invest in solar.

But the utilities have argued that they are helping out ratepayers who subsidize the solar and renewable DG programs by contributing SRECs toward the RPS procurement target. If the utilities have to buy the SRECs, they said, then ratepayers will be paying twice for the renewable energy output for the RPS requirements.

"Due to their substantial funding of renewable DG, it is appropriate that those ratepayers be permitted to count the output of those renewable generators toward meeting the utility RPS requirements," said Pacific Gas and Electric in a written statement to the CPUC.

But because the RPS and the CSI were created separately from each other, the SRECs should not automatically go toward the utilities' contribution to the RPS, said Hochschild. Lumping the two programs together will result in less offsets of CO2 emissions.

"The PV industry has been very consistently advocating that the RECs belong to the purchaser of a system and not to the utility, and that's our position as well," said Les Nelson, Executive Director for CALSEIA. "However, I can see the other position. If there's nothing in it for the utilities, there's going to be less of an incentive for them to become involved."

CPUC Administrative Law Judge Maryam Ebke will issue a proposed decision on who owns SRECs on November 14th. There will be a 30-day comment period after the ruling. Hochschild and other solar advocates are encouraging anyone interested in the proposed decision to become an intervener and file comments to the CPUC during this period.

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