Posted by: jbarnesca | February 6, 2010

Major Change in PG&E Solar IPP Program Regarding PPA Rate

On January 26  the ALJ and Commission President (Mr. Peevey) both issued major new proposed decisions in the very important PG&E distributed solar program that authorizes 250 MW of solar installations to be built for both the utilities’ s ownership and for independent power producers, IPPs.

This document was an major change and update from the prior PG&E proposal from last year and it tried to address the new situation after the recent final decisions of the SCE SPVP program and the legislative FIT bill SB 32 passed last year.

There is much to be learned from reading the proposed new decision and the alternate proposed decision from Mr. Peevey, but let me address the most important new twist, the PPA rate allowed for the IPP reverse auction process, and the rate that PG&E is allowed to recover for their solar plants.

On p. 46 here is the important stuff:

“…we adopt a cost cap as recommened by TURN for the maximum price ratepayers should pay for energy procured from the PV Program.”…”we use the information from PG&E’s 2009 RPS solicitation, which represents the market price for these projects and adopt a price cap calculated as weighted average pre-time of delivery adjusted energy price of PV projects that bid into PG&E’s 2009 slicitation,”

So here is what is about to happen:

  1. PG&E will be compensated by an average of the prior year solar PPA solicitation bids times the amount of energy they use, not the $0.246/KWh rate they had expected all year
  2. The reverse auction process, which is already onerous, now has a very low cap price that is the average of the prior year RPS solicitations for solar PV farms of 20MW or lower.

Seven States(including 4 municipal utility districts)(IL, IN, MI, MN, NY, RI, WI) have proposed FIT legislation based on the Renewable Energy Cost  not Avoided Cost like CA with VT and HI already having enacted FITs.  The local municipal utilities of Gainsville, FLA, San Antonio, Texas, and even Sacramento MUD have FITs underway.

If an international solar investor can choose to develop solar farms in India with their proposed FIT rate of $0.37/kWh or this program, what will they choose.  Where will the important green jobs go for California?  Groups like TURN should be more careful when serving the needs of the consumers.

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Responses

  1. Question for a would be developer. What is the rate we can expect from PGE for small scale 1-2MW plants which by the way is favorable to build more of these for grid stabilization via distributed capacitance? At one time we looked at it the summer rates with peak time incentives paid the seller over .24 per KWH.

    • Mr. Corriea,
      I believe from many calls over the years from perspective new developers in CA and throughout the US that perspectives from reading information or looking at Utility sites gives a deceptive view to new developers.

      First of all there are no real viable RFO programs for such projects in CA. Re-MAT or any community energy GTSR programs.
      Winning bids for Re_MAT are already reaching the desperate $0.65/Kwh level.

      This is why smaller developers have to once again lobby in Sacramento for new programs as we did in the 2008-2010 period.

      PG&E and SCE don’t really care about your grid stabilization reasoning. They just petition to not have any more solar so it is not a problem.

      • Copy that. They want the jumbo size and want control. Good news is some of that control is diluted a bit with some of the new AB laws passed at least from what I read.

        My partner/investor and I are looking at searching out PPA’s with private companies and perhaps local Governments here in our county. The bill enabling and protecting that business opportunity should keep things moving the right direction for awhile eh? The CPUC authorizing utilities to double the rates by 2019 may help drive it as well.

        Thanks for the reply by the way!

  2. A net metering or virtual net metering deal with a company or local government is a different matter that my comments earlier. Those opportunities are still viable for the foreseeable future.

    So you are in a different space that is good.

    Best wishes.

    • That’s right. We have looked at PPAs with the utilities only to find a matter of course that was not at all conducive to actually getting a needed valuable asset to existence. With this avenue and bills like SB843 community solar. We can not only help preserve and stabilize the grid but ultimately our planet.


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