Calif. Program Aims to Spur Mid-Sized Solar Development
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.
Members of 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.
“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 online quickly, in a way that delivers sustained value to ratepayers. … At scale, solar is more cost-effective than the fossil fuel alternatives,” said Adam Browning, executive director of Vote Solar, a nonprofit organization working to make solar a mainstream American energy resource.
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 Solar Alliance applauds the CPUC for creating and approving this RAM Program, which will open up a significant market potential in California for simplified renewable energy procurement,” said Sara Birmingham of the Solar Alliance, a trade association of solar manufacturers and developers.
“This program is a thoughtful design that helps keep the state on track with its renewable energy obligations and goals but in a cost-effective and pragmatic way. We are very excited about the significant opportunity it provides solar developers,” said Polly Shaw, Director of External Relations for Suntech America, one of the world’s largest solar energy companies.