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California incentives and subsidies

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Dissemination of money aimed at stimulating a market for renewables is now starting in California as deregulation of the state's electricity supply business gets under way. The aim is to ease the way for renewables, which will otherwise be disadvantaged in the hotly competitive new market. California started its four year shift to deregulation on April 1.

On March 31, the California Energy Commission (CEC) released a notice regarding an auction for "New Renewable Resources Account." This part of the state's renewables program is an incentive of up to $0.015/kWh for the first five years of a renewable project's life. The total amount available is $162 million a year -- 30% of the $540 million available for renewables from the CEC. Bids must be submitted by May 26. Results of the auction should be issued on June 15.

To be qualified, projects must be located within California. They can use any renewables technology, including wind, and can be either a viable new plant, an already existing one, or a substantially refurbished -- or repowered -- one, as long as they are on-line anytime between September 26, 1996 and January 1, 2002. The CEC will basically support the bids requesting the lowest incentives first, until the money is used, or until all bids are supported.

The $540 million over four years is to aid the development of renewable technologies and to help provide a market for renewable electricity during the transition from 1998 to 2001 to a deregulated market. The market-oriented program also includes credits for customers who choose to buy renewable electricity, again of up to $0.015/kWh. The credit incentive is paid to the electricity service provider, who then passes it on to the consumer in the form of a reduced electricity price. It is only available for purchases of "renewable electricity" products registered with the CEC and generated within California.

Second program

In addition, almost $250 million in research and development funding is being made available over the next four years from the state's new Public Interest Energy Research (PIER) program. June 1 is the deadline for submitting proposals for the second PIER general solicitation. The money available is approximately $10 million, according to the CEC, which issued a formal notice for the solicitation on April 3. The request for proposals has been available both on the Internet and by mail since April 10.

Wind related proposals are eligible for this latest round of competition, although more marginally so than for the first round. (Windpower Monthly, March 1998). Subject area is limited to end-use efficiency and so-called "strategic" energy research -- research that is more revolutionary than evolutionary, says the CEC's Bob Aldrich. Proposals can, however, be for system related projects, including generation and supply. Thus a winning bid might be for a system-related project with a renewables component, such as storage of wind powered electricity, says Aldrich.

The PIER program, part of the state's SB 90 deregulation legislation passed last year, provides a total of $61.8 million in funding each year for the next four years for publicly oriented energy research and development in areas that would not be adequately funded in the move to a competitive market place.

PIER is already proving popular. The first general round -- for renewables, environmentally preferred advanced generation and environmental research -- drew 186 responses by its March 20 deadline. The names of those submitting proposals, for a total of some $15 million in funding, are confidential, but Aldrich says it is probably safe to assume that wind developers are among them. The CEC would not confirm what technology any of the proposals intend to use.

The winners are to be announced in June, with contracts due to start on July 1. Authorisation for the PIER "transition funding solicitation" was given by the CEC in January. Thirty-nine projects are expected to be selected for financial support amounting to $17 million for the upcoming year.

More solicitations

A fourth PIER solicitation -- this time for "small grants" -- will be issued later this year. It is designed to help recipients evaluate research, development and demonstration concept feasibility and thus should stimulate energy innovation. In the second half of the year, further PIER solicitations may be also made, says the CEC. These will target energy technologies and RD&D issues that are especially important to California and to provide money for research efforts that span multiple projects.

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