CALIFORNIA:

State sets up auctions for utilities to buy small renewable energy contracts

California regulators last week approved a variation on a feed-in tariff for small-scale renewables.

The California Public Utilities Commission's "renewable auction mechanism," or RAM, is intended to fill in the gaps between other renewables programs like the general renewables portfolio standard, which sets an overall target of 33 percent renewables by 2020, and the California Solar Initiative, which gives out rebates for rooftop solar and solar hot water heaters.

Under the decision, the state's three investor-owned utilities will hold biannual auctions, starting this November, to buy renewable energy contracts up to 20 megawatts in size until a total of 1 gigawatt (1,000 MW) is reached (ClimateWire, Jan. 5). Utilities will get to decide before each auction how many megawatts they want of certain types of power: baseload, peaking and non-peaking.

The program -- called a "reverse auction" because it accepts the lowest bids -- is intended to spur small-scale solar as Germany, Spain and the United Kingdom have, but without the artificial market protection that a fixed price confers. Projects must be at least 500 kilowatts in size, and can aggregate their bids in groups from 1 to 5 MW. Projects must be up and running within 18 months of winning their bids.

Adam Browning, executive director of the San Francisco-based nonprofit Vote Solar Initiative, criticized the provision that allows existing generators to place bids, as well as new projects. While it will help biomass projects, which likely wouldn't be able to get off the ground in the next 18 months, it also takes away from new generation, which is what the program is designed to benefit, he said.

"I think currently existing projects have paid off their capital costs and just have operating costs; they're quite competitive and could get a contract under other mechanisms," he said. "I would have preferred this just be for new generation ... we're trying to grow the industry."

Solar companies welcomed the decision. Dan Berwick, policy director for developer Borrego Solar, which specializes in commercial and government installations, compared it favorably to a feed-in tariff, which sets a predetermined, per-kilowatt-hour price for renewables. "The program takes the best parts of successful feed-in tariffs, but innovates to introduce market competition that will keep prices as low as possible," he said in a statement.

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