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Publications > Proceedings of the Energy Symposium The California Energy Commission's Renewable Energy Program

Marwan Masri Manager Renewable Energy Program California Energy Commission Mr. Masri was born in 1945. He has a graduate degree in economics from the University of California. His experience includes twenty-two years in the energy field, and fifteen years as a lecturer in economics at several universities in California with particular emphasis on the economics of energy and the environment. He has also spoken at numerous international conferences dealing with the economics of energy and the environment. As a senior economist at the California Energy Commission, he directed an interdisciplinary team that conducted technical and policy research on a wide range of energy issues, including: the comparative economics of alternative energy resources; the valuation of environmental impacts of energy production; global climate change; and the economics of energy research, development, and demonstration. Since October 1996, Mr. Masri has directed the Renewable Energy Program established by Assembly Bill 1890 and Senate Bill 90. This program administers $540 million in incentive funds to support existing, new and emerging renewable technologies in California during the state’s transition to a competitive electricity market and beyond.

Existing Account Funds are distributed monthly to renewable suppliers through a cents per kilowatt-hour (kWh) payment for eligible renewable electricity generation. Payments are based on the difference between the market price [either the short-run avoided cost (SRAC) price or the California Power Exchange (CalPX) price] and the target price, subject to the cap, and limited by the amount of funds available in the Existing Account each month.

New Account The first New Account auction was held in June 1998 and resulted in 55 winning bids for projects totaling more than 500 megawatts (MW) of new renewable generation. Auction participants were required to submit the cents/kWh incentive they wished to receive (capped at 1.5 cents/kWh), an estimate of their first five years of generation, a detailed description of the proposed project, and a bid bond equal to 10 percent of their proposed total award (incentive multiplied by generation).

A total of $162 million was conditionally allocated to the 55 winning project bids; funding is conditional on passing six milestones and coming on-line before January 1, 2002. Projects receive no funding until they begin generating electricity for sale.

Emerging Account The Emerging Account's Buydown Program provides payments to buyers, sellers, lessors or lessees of eligible electricity generating systems that are powered by emerging renewable resources. The Buydown Program is open to generating systems of all sizes but is intended to favor small generating systems, such as those typically used by residential or small commercial and agricultural customers.

Intent of the Buydown Program is to reduce the net cost to the end user of generating equipment using emerging renewable technologies, thereby stimulating sales of such systems. Increased sales are expected to encourage manufacturers, sellers, and installers to expand their operations and reduce their costs.

Customer Credit Subaccount The Customer Credit Subaccount program began when the electricity market opened on March 31, 1998 and is expected to continue through December 2001 with funding allocated through Senate Bill 90. In most cases, electricity providers pass the credit on to consumers through a discounted electricity price; the credit is included in the electricity price. Providers must inform consumers about the credit on their bill. The customer credit, which is currently set at 1.0 cent/kWh, is a credit for the purchase of eligible renewable energy. The rebate is given to eligible consumers who purchase eligible renewable energy from a registered renewable provider. In most cases, electricity providers pass the credit on to consumers through a discounted electricity price; the credit is included in the electricity price. At the opening of the program, the credit level was set at 1.5 cents/kWh, the maximum allowable by law. The Commission has since lowered the credit level in response to market growth and the growing demand on funds.

Consumer Education After gathering stakeholder input, the Energy Commission adopted the Renewable Energy Consumer Education Marketing Plan in February 1999. The Marketing Plan outlines two action paths; one for renewable energy from the grid and a separate for emerging renewable technologies. 80% or $4.32 million for marketing and educational activities to promote the renewable energy market. 20% or $1.08 million for marketing and educational activities to promote emerging renewable technologies for on-site generation of renewable power.

Status: Existing Account As a result of high short-run avoided cost (SRAC) prices, the rollover has nearly tripled for the three tiers combined and is currently over $40 million. The rollover is the amount of money that is available in the Existing Account bus has not yet been paid out to facilities. Any funds that are not paid in one month are added to the following month's allocation and made available for that month's payments cycle. SRAC prices are expected to stay high, and it is unlikely that payments will be made to any facilities in Tiers 1, 2, or 3 through the end of 2000. The term "off the cliff" refers to the end of a facility's fixed payment period of its contract with a utility.

Status: New Account Winning projects are expected to pass six milestones, including applying for and receiving necessary permits, starting construction, and coming on-line, before receiving any payments. Filing for permits is Milestone 2. As of October 1, 2000, 12 participating projects totaling over 100 MW were on-line and producing renewable energy (eight landfill gas facilities, two wind facilities, and two geothermal plants).

Status: Customer Credit Account Energy Service Performance Contracts and products under the customer credit account are shown.

Renewable Market Share of the Direct Access Market (All Customers) Most of the customers who have switched service providers have chosen renewable energy.

Renewable Market Share of the Direct Access Market (Residential Customers) The trend is even more pronounced among residential customers. Almost all of the customers who have switched service providers have chosen renewable energy.

Second Auction The $40 million was reallocated from the Existing Account’s rollover funds. Primary purpose of the auction is to help ease the energy shortage that California could face in the summer of 2001.

Extension of Public Goods Charge The program has been extended for another 10 years. In order to provide confidence to investors, the relatively long-term (10 years) commitment was necessary.

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