Renewable Energy Program

The California Energy Commission's Renewable Energy Program works to support renewable electricity generation technologies and to develop a renewable energy market in California. The Renewable Energy Program administers $540 million collected from the ratepayers of Southern California Edison Company, Pacific Gas and Electric Company, and San Diego Gas and Electric Company. Two potential additional sources of funds are voluntary contributions from customers and contributions from municipal utilities. Assembly Bill 1890 (AB 1890) restructured electricity generation and sales in California and also established a new statewide renewable energy policy. The Energy Commission submitted a report to the Legislature (Policy Report on AB 1890 Renewables Funding, publication number 500-97-002), recommending funding allocations and distribution mechanisms to foster the development of a competitive renewable energy market in the state. Senate Bill 90 (SB 90) implemented the report's recommendations and created the Renewable Resource Trust Fund for administering ratepayer funds. The Trust Fund consists of four accounts: the Existing Renewable Resources Account ($243 million), the New Renewable Resources Account ($162 million), the Emerging Renewable Resources Account (Buydown Rebate Program, $54 million), and the Customer-Side Account (Customer Credit Subaccount and Consumer Education Subaccount, $81 million). The Existing Renewable Resources Account has three tiers. Tier 1 ($135 million) consists of biomass, waste tire, and solar thermal projects. Tier 2 ($70.2 million) consists of wind projects. Tier 3 ($37.8 million) consists of geothermal, small hydro, digester gas, landfill gas, and municipal solid waste projects. The Renewable Energy Program disburses payments from the Renewable Resource Trust Fund using market-based mechanisms that assist both the supply and demand sides of the market. Each account is fashioned to support the market in a unique way. The Existing Account provides assistance to California renewable energy facilities that were operating before September 1996. Funds are distributed through a cents-per-kilowatt-hour production incentive, with a cap of 1.0 cent per kilowatt-hour. The Existing Account has helped support 259 existing renewable facilities with generation totaling 4, 144 megawatts. The New Account supports the development of new renewable power facilities in California. Funds are distributed through a production incentive based on competitive auctions. The first auction conditionally awarded $162 million to 55 winning bidders, including 300 megawatts of wind, 157 megawatts of geothermal, 70 megawatts of landfill gas, 12 megawatts of biomass, 2 megawatts of digester gas, and 1 megawatt of small hydro. As of January 2002, 12 projects are operational, contributing more than 100 megawatts of new renewable energy capacity to California's energy supply. A second auction in December 2000 awarded an additional $40 million to 17 new projects. Since the original awards were made, most of the projects have become operational. Once they are fully completed, they will collectively add 471 megawatts in new energy capacity. The California Energy Commission offers cash rebates on eligible renewable energy electric-generating systems through the Emerging Renewables Buydown Program. To date, consumers have received rebates from the account for about 480 installed emerging renewable technology systems, representing more than 2, 000 kilowatts in capacity from on-site generating systems. Eligible systems are photovoltaic, solar thermal electric, fuel cell technologies using renewable fuels, and wind turbines of 10 kilowatts or less. As of September 2001, the Emerging Buydown Account had received more than 965 reservation requests. Currently, $2.7 million have been earmarked for projects with reservation requests, and $5.7 million have been paid in rebates for completed projects. The Customer Credit Subaccount provides credits to customers who purchase eligible renewable electricity products from registered renewable energy providers. As of September 2001, the credit level extended to consumers is 1.0 cent per kilowatt-hour. There are currently 29 providers with 46 registered renewable energy products participating in the account. Technologies represented by this program include biomass, landfill gas, solar thermal, digester gas, municipal solid waste, waste tire, geothermal, wind, and small hydrolic. Since the program's inception, it has continued to grow in popularity with California consumers. The most recent data available from the Commission report that 200, 000 customers received the credit during 2000, with payments on eligible technologies totaling more than $44.1 million. The Consumer Education Subaccount helps develop a consumer market for renewable energy in California. Grant and contract opportunities are available to eligible individuals and organizations whose activities raise consumer awareness about renewable energy and its benefits. A $1.2 million contract was awarded in 2000 with the intent to educate consumers in targeted California communities about renewable energy. As an ongoing program, the goal of this project is to educate consumers, generate public interest about renewable energy resources, and build and maintain a consumer-driven market for renewable power through consumer education. In the spring of 2001, the CEC awarded an additional contract of $2.5 million to initiate a general public awareness campaign with California?s consumers. During 2001, grants totaling $620, 000 were awarded to address grassroots outreach needs. In addition to these activities, several grant projects totaling $375, 000 have been initiated to help promote emerging renewable technologies.

Program Summary
Brief Description: 
The California Energy Commission's Renewable Energy Program supports renewable electricity generation technologies and helps develop a renewable energy market to avoid greenhouse gas emissions.
The Renewable Energy Program has jumpstarted California's renewable energy resource development. Program officials estimate that the quantity of California's electrical generation produced from overall renewable resources will increase from 12 percent in 2000 to 17 percent in 2007. Through June 2001, the program resulted in 60, 830, 142 kilowatt-hours of electricity generated from renewable energy, displacing fossil fuel generation. The resulting reduction in CO<sub style="line-height:100%">2</sub> is at least 25, 000 tons per year. This CO<sub style="line-height:100%">2</sub> reduction benefit will grow as the program expands.
Lessons Learned: 
The Renewable Energy Program was designed to facilitate the growth of a sustainable renewable energy market in California. The program uses market-based incentives to support renewable energy developers, generators, and their customers to help stimulate customer demand for, and supply of, renewable energy and technologies. The program affects a broad range of stakeholders, and therefore presents the challenge of delivering effective results while accommodating many interests. Coordination among many state agencies and the private sector was important for the program's success. The key is developing a number of new market-based incentives that mesh with other state and federal incentive programs.Program managers recommend that other states considering a renewable energy program should develop market- and performance-based incentives to ensure long-term sustainability. The program structure should be flexible to respond to changing market conditions. Policies should have simple guidelines that are transparent to stakeholders and easy to administer.
Without AB 1890, electricity generation restructuring in California would have resulted in reduced or non-existent funds for renewable energy. AB 1890 (1996) and SB 90 (1998) created the Renewable Resource Trust Fund, which charged the Energy Commission with developing and implementing a market-based program to provide incentives for renewable electricity generators and their customers who purchase emerging renewable energy technology systems. The legislation also provided for consumer education to help increase demand for renewable energy and technologies. The program, implemented in 1998, has been extended. In 2000, AB 995 and SB 1194 created the Reliable Electric Service Investments Act, extending the collection of funds and requiring the Energy Commission to recommend a plan for allocating the funds from January 2002 through January 2007. Interested parties can download the plan, Investing in Renewable Electricity Generation in California, from <a href=""></a>.