On January 26, the CPUC issued a decision approving Pacific Gas and Electric’s 500 MW solar PV DG proposal. This follows on the CPUC’s decision to approve the final details of Southern California Edison’s 500 MW proposal the previous week. The PG&E program includes 250 MW of utility-owned generation and 250 MW of PPAs.
In its decision, the CPUC rejected PG&E’s proposal to use fixed-pricing for the PPA portion and instead decided that procurement of PPAs should be through competitive bid. Importantly, the CPUC also limited PG&E’s cost recovery to no more than the average cost of PPA winning bids.
This decision brings to light the significant impacts of the passage of SB 32, feed-in tariff legislation that expands the state’s current feed-in tariff program priced at the Market Price Referent (MPR) to systems up to 3 MW (the limit was formerly 1.5 MW). The CPUC has determined that with the passage of SB 32, the competitive bid portion of the PG&E program is only available to systems from 3-20 MW. PG&E had proposed that systems in the 1-20MW range be allowed to participate. Staff had proposed that systems 1-10 MW be allowed to participate. This may leave the most ideal size range for PV installations (those that are large enough to get economies of scale but small enough to be deployed on distribution lines) off the table. The only policy support for systems in this size range may be MPR pricing, which has failed to bring any solar PV projects online over the last couple years.
In an attempt to rectify this situation, CPUC President Peevey proposed an alternate decision that would include systems from 1-3 MW. The alternate decision also allows up to 5% of the utility-owned generation capacity authorized under this program to be from facilities less than 1 MW in size and/or roof-mounted. The proposed decision does not allow these types of projects to be pursued under the program.