Proposition 7: Analyzing the issues related to projects that are less than 30MW
Prepared by Sue Kateley, Executive Director, California Solar Energy Industries Association

CALSEIA’s purpose is to expand the use of all solar technologies. In California, there exists significant market potential for distributed renewable generation. Distributed renewable generation means that a renewable power plant is constructed to produce power close to where the power is needed. The advantage of distributed generation is that it improves transmission efficiency, reduces transmission congestion, reduces the need for new transmission facilities, reduces the need to build projects in environmentally sensitive locations, and in the specific case of solar technologies, provides power during periods of peak electricity demand. Most distributed generation projects are less than 20 megawatts (MW). Specific to solar technology, CALSEIA is working to establish a tariff that will provide long term contracts which will expand the market for projects that are less than 20 MW (CALSEIA expects many of these projects to be 3 MW or less) on existing transmission circuits.

CALSEIA concluded that it must oppose Proposition 7 because it changes the definition of eligible solar projects (known as eligible renewable energy resources) in a way that excludes solar projects that are less than 30 MW from participating in the RPS program. The plain reading of Proposition 7 is that only those projects which fall within the definition of a solar and clean energy plant (those that are 30 MW or more) are counted toward the RPS procurement requirements.  Specifically,

1. Prop 7 adds a new code section in the Public Resources Code which defines a “solar and clean energy plant” as a renewable plant that is 30 MW or more.
2. Prop 7 changes the definition of an “eligible renewable energy resource” to exclude renewable plants with generation capacities under 30 MW by effectively equating an “eligible renewable energy resource” with a “solar and clean energy plant”.
3. Prop 7 adds intent language stating that utilities should procure electricity from solar and clean energy resources and that approvals for “solar and clean energy plants” should be fast-tracked.
4. Prop 7 adds language stating that it is the intent of the people to encourage “solar and clean energy plants.”
5. Prop 7 changes and adds language in various sections of the Public Resources Code that would create incentives and expedite permitting solely for projects and transmission facilities for solar and clean energy plants.  Since these amendments only apply to solar and clean energy plants (defined as 30 MW or larger), they would not benefit most distributed generation projects.  The changes either:

a. Delete some references to “solar thermal powerplant” and inserts “solar and clean energy plant,” or
b. Add the phrase “solar and clean energy plant” after “solar thermal powerplant.”

6.  If Proposition 7 becomes law it will require a 2/3 super-majority vote of the California Legislature to correct these flaws.

Findings and Conclusions

* Proposition 7 defines “solar and clean energy plants” as projects that are 30 MW and more.
* Proposition 7 changes the definition of an eligible renewable energy resource to only include “solar and clean energy” facilities (30 MW minimum).

Therefore, only those projects that are 30 MW or larger are counted toward the utility RPS procurement requirements. Renewable projects that are less than 30 MW are excluded.
If Proposition 7 is enacted, the renewable energy industry will be forced to spend time and money to change these definitions when it has few resources to support such an effort and it will have no certainty regarding the outcome.

Excerpts from Proposition 7 to support CALSEIA’s Analysis

1. Prop 7 adds a new code section in the Public Resources Code that defines a “solar and clean energy plant.”  The proposed definition specifies that a solar and clean energy plant must have a generating capacity of 30 MW or more.

SEC 14. Section 25137 of the Public Resources Code is added to read as follows:

25137. "Solar and clean energy plant" means any electrical generating facility using wind, solar photovoltaic, solar thermal, biomass, biogas, geothermal, fuel cells using renewable fuels, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current technologies, with a generating capacity of 30 megawatts or more, or small hydroelectric gene ration of 30 megawatts or less, and all facilities appurtenant thereto. Exploratory, development, and production wells, resource transmission lines, and other related facilities used in connection with a renewable project or a renewable development project are not appurtenant facilities for the purposes of this division.

2. Prop 7 changes the definition of an “eligible renewable energy resource” to exclude renewable plants with generation capacities less than 30 MW.

Proposition 7 proposes an amendment to Public Utilities Code section 399.12(b) that changes the definition of what constitutes an eligible renewable energy resource. The strikeout and italicized portions are the changes:

399.12 (b) "Eligible renewable energy resource" means an electric generating solar and clean energy facility that meets the definition of "in-state renewable electricity generation facility" in Section 25741 of the Public Resources Code, subject to the following limitations:

( I)(A) An existing small hydroelectric generation facility of 30 megawatts or less shall be eligible only if a retail seller owned or procured the electricity from the facility as of December 31, 2005. A new hydroelectric facility is not an eligible renewable energy resource if it will require a new or increased appropriation or diversion of water from a watercourse.
(B) Notwithstanding subparagraph (A), an existing conduit hydroelectric facility, as define d by Section 823a of Title 16 of the United States Code, of 30 megawatts or less, shall be an eligible renewable energy resource. A new conduit hydroelectric facility, as defined by Section 823a of Tit le 16 of the United States Code, of 30 megawatts or less, shall be an eligible renewable energy resource so long as it does not require a new or increased appropriation or diversion of water from a watercourse.

Note that within this definition there is a reference to Public Resources Code 25741. Here is that existing statute:

   (b) "In-state renewable electricity generation facility" means a facility that meets all of the following criteria:
   (1) The facility uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology.
   (2) The facility satisfies one of the following requirements:
   (A) The facility is located in the state or near the border of the state with the first point of connection to the transmission network within this state and electricity produced by the facility is delivered to an in-state location.
   (B) The facility has its first point of interconnection to the transmission network outside the state and satisfies all of the following requirements:
   (i) It is connected to the transmission network within the Western
Electricity Coordinating Council (WECC) service territory.
   (ii) It commences initial commercial operation after January 1,
2005.
   (iii) Electricity produced by the facility is delivered to an in-state location.
   (iv) It will not cause or contribute to any violation of a California environmental quality standard or requirement.
   (v) If the facility is outside of the United States, it is developed and operated in a manner that is as protective of the environment as a similar facility located in the state.
   (vi) It participates in the accounting system to verify compliance with the renewables portfolio standard by retail sellers, once established by the Energy Commission pursuant to subdivision (b) of Section 399.13 of the Public Utilities Code.

3. Prop 7 adds intent language stating that utilities should procure electricity from solar and clean energy resources and  that approvals for solar and clean energy plants should be fast-tracked.

SEC  3. PURPOSE AND INTENT
C.  Require all California utilities -- including government-owned utilities like the Los Angeles Department of Water and Power -- to procure electricity from solar and clean energy resources, in the following timeframes:
1. 20 percent by 2010;
2. 40 percent by 2020; and,
3. 50 percent by 2025;
D.  Fast-track all approvals for the development of solar and clean energy plants and related transmission facilities while guaranteeing all environmental protections -- including the
Desert Protection Act;

4. Prop 7 adds intent language stating that it is the intent of the people to encourage “solar and clean energy plants.”

SEC  3. PURPOSE AND INTENT
E.  Create production incentives for the development and construction of solar and clean energy plants and related transmission facilities.
SEC 21. Section 25541.1of the Public Resources Code is amended to read as follows:

It is the intent of the Legislature People to encourage the development of thermal powerplants or solar and clean energy plants using resource recovery (waste-to-energy) technology. Previously enacted incentives for the production of electrical energy from nonfossil fuels in commercially scaled projects have failed to produce the desired results. At the same time, the state faces a growing problem in the environmentally safe disposal of its solid waste.
The creation of electricity by a thermal powerplant or solar and clean energy plant using resource recovery technology addresses both problems by doing all of the following:
       (a) Generating electricity from a nonfossil fuel of an ample, growing supply.
       (b) Conserving landfill space, thus reducing waste disposal costs.
       (c) Avoiding the health hazards of burying garbage.

Furthermore, development of resource recovery facilities creates new construction jobs, as well as ongoing operating jobs, in the communities in which they are located.

5. Prop 7 changes and adds language in various sections of the Public Resources Code that would create incentives and expedite permitting solely for projects and transmission facilities for solar and clean energy plants.  Since these amendments only apply to solar and clean energy plants (defined as 30 MW or larger), they would not benefit most distributed generation projects. The changes either:
a. Delete reference to “solar thermal powerplant” and inserts “solar and clean energy plant,” or
b. Add the phrase “solar and clean energy plant” after “solar thermal powerplant.”

These sections deal with creating production incentives and expedited permitting for projects that are either solar thermal powerplants or solar and clean energy plants.  These changes are extensive throughout the proposition. The excerpts are lengthy and extensive – please refer to the Ballot initiative itself to review these changes. 

6. If Proposition 7 becomes law it will require a 2/3 super-majority vote of the California legislature.

SEC 30. Amendment

The provisions of this Act may be amended to carry out its purpose and intent by statutes approved by a two-thirds vote of each house of the Legislature and signed by the governor.