1. 1 Encouraging Solar Development in California Commissioner Mark Ferron California Public Utilities Commission July 13, 2011

2. 2 Presentation Overview 1.Introduction 2.Renewable Energy in California 3.Solar’s Role in California’s Renewable Portfolio Standard 4.Focus on California Solar Initiative 5.Other Solar Programs in California 6.Challenges and Future Issues

3. 3 The Regulatory Web A complex web of state and federal regulatory bodies administer California’s energy policy State 1.California Public Utilities Commission (CPUC) 2.California Energy Commission (CEC) 3.California Independent System Operator (CAISO) 4.California Air Resources Board (CARB) 5.Local, Municipal and County Authorities Federal 6.Federal Energy Regulatory Commission (FERC) 7.Department of Energy (DOE) 8.Environmental Protection Agency (EPA) 9.Nuclear Regulatory Commission (NRC)

4. 4 California Public Utilities Commission Regulates distribution and retail sales by Investor Owned Utilities (PG&E, SoCal Edison, SD Gas & Electric, and other small or multi- state utilities) Responsibilities: –Setting electricity rates –Protecting consumers –Guiding procurement practices (i.e. renewable energy) –Promoting energy efficiency & conservation –Ensuring electric system reliability Five commissioners: –Appointed by the governor with senate confirmation, for staggered six-year terms

5. 5 What do I bring to the Commission? Quite a lotNot so much Commercial experience Outsiders Viewpoint Quantitative Approach Independence Regulatory experience Deep insider knowledge Legal Approach History and Connections

6. 6 California Leads the Way in Renewable Power California is the largest single market in the US for renewable energy California’s renewable goals will: Add another ~20,000 MW of new renewables to reach 33% by 2020 Reduce CO 2 emissions by 18.7 million metric tons in 2020

7. 7 IOU RPS Procurement Forecast With risk weightings based on viability calculator Source: California Public Utilities Commission, 2 nd Quarter 2011

8. 8 Solar projects are now dominating RPS bids RPS solicitations by Technology

9. 9 Solar will be the most important Renewable Based on IOUs’ signed RPS contracts

10. 10 Solar PV Bids up to 20 MW

11. 11 Major Growth in Installed Customer-side Solar PV

12. Program Size (MW) Participating Buyers and Sellers Eligible Technologies and Project Size Market Opportunity Renewables Portfolio Standard ~20,000 new MW needed All IOUsAll technologies Up to 1.5 MW IOUs hold annual RPS solicitations Feed-in Tariff750IOUs and municipal utilities All technologies Up to 3 MW Contracts accepted until cap reached Renewable Auction Mechanism 1,0003 large IOUsAll technologies Up to 20 MW 2 auctions per year IOU Solar PV Programs 1,100Utility-owned generation (UOG) Independent Power Producers (IPP) Solar PV SCE: 1 - 2 MW PG&E: 1 - 20 MW SDG&E: 1 - 5 MW At least 1 auction per year per program Qualifying Facilities (QFs) Uncapped3 large IOUsAll RPS-eligible technologies plus CHP Contracts accepted on an ongoing basis California Solar Initiative (CSI) 1,940CustomersSolar Photovoltaic and Solar Thermal Applications accepted until incentive budget is exhausted 12 Solar has many options CPUC Procurement Programs

13. 13 The California Solar Initiative The second largest solar incentive program in the world with the goal to create 3,000 megawatts of new, solar-produced electricity by 2017 Statewide budget of $3.3 billion over 10 years; Incentives decline to zero by 2017 Allocated $50 million in grants for RD&D and an unprecedented $108 million low- income incentive program - the first statewide low-income solar program to be implemented at this scale. Builds on success of Self Generation Incentive Program that included incentives for solar, but also combined heat and power, wind, fuel cells, and other customer generation technologies. Joint CPUC/Energy Commission website: www.GoSolarCalifornia.ca.govwww.GoSolarCalifornia.ca.gov

14. 14 General Market Program has a goal of 1,750 MW

15. 15 CSI incentives decline as demand grows ¢/kWh $/watt We are here

16. 16 CSI Applications in 2010 Means Robust and Sustained Growth Source: www.californiasolarstatistics.com, data through December 31, 2010

17. 17 Average CSI System Cost per Quarter Source: www.californiasolarstatistics.com data through April 1, 2011. Systems under 10 kW Systems over 10 kW

18. 18 Program Size (MW) Participating Buyers and Sellers Eligible Technologies and Project Size Market Opportunity Renewables Portfolio Standard ~20,000 new MW needed All IOUsAll technologies Up to 1.5 MW IOUs hold annual RPS solicitations Feed-in Tariff750IOUs and municipal utilities All technologies Up to 3 MW Contracts accepted until cap reached Renewable Auction Mechanism 1,0003 large IOUsAll technologies Up to 20 MW 2 auctions per year IOU Solar PV Programs 1,100Utility-owned generation (UOG) Independent Power Producers (IPP) Solar PV SCE: 1 - 2 MW PG&E: 1 - 20 MW SDG&E: 1 - 5 MW At least 1 auction per year per program Qualifying Facilities (QFs) Uncapped3 large IOUsAll RPS-eligible technologies plus CHP Contracts accepted on an ongoing basis California Solar Initiative (CSI) 1,940CustomersSolar Photovoltaic and Solar Thermal Applications accepted until incentive budget is exhausted Solar has many options IOU Solar PV Programs

19. 19 Program Size (MW) Participating Buyers and Sellers Eligible Technologies and Project Size Market Opportunity SCE Solar PV Program (SPVP) 500250 MW UOG 250 MW IPP Solar PV Primarily rooftop 1-2 MW Fully Implemented (D.09-06-049) PG&E Solar Program 500250 MW UOG 250 MW IPP Solar PV Primarily ground-mount 1-20 MW Approved in D.10-04-052, Staff implementing SDG&E Solar Program 10026 MW UOG 74 MW IPP Solar PV Primarily ground-mount 1-5 MW D.10-09-016 approved program, Staff to implement Investor-owned Utility Solar PV Programs

20. 20 Program Size (MW) Participating Buyers and Sellers Eligible Technologies and Project Size Market Opportunity Renewables Portfolio Standard ~20,000 new MW needed All IOUsAll technologies Up to 1.5 MW IOUs hold annual RPS solicitations Feed-in Tariff750IOUs and municipal utilities All technologies Up to 3 MW Contracts accepted until cap reached Renewable Auction Mechanism 1,0003 large IOUsAll technologies Up to 20 MW 2 auctions per year IOU Solar PV Programs 1,100Utility-owned generation (UOG) Independent Power Producers (IPP) Solar PV SCE: 1 - 2 MW PG&E: 1 - 20 MW SDG&E: 1 - 5 MW At least 1 auction per year per program Qualifying Facilities (QFs) Uncapped3 large IOUsAll RPS-eligible technologies plus CHP Contracts accepted on an ongoing basis California Solar Initiative (CSI) 1,940CustomersSolar Photovoltaic and Solar Thermal Applications accepted until incentive budget is exhausted Solar has many options Renewable Auction Mechanism

21. 21 Challenges and Future Issues 1.Transmission 2.Interconnection 3.Grid Integration 4.Permitting 5.Cost containment

22. Transmission Is Needed To Meet RPS Goals 22

23. 23 DG Interconnection Requests have Increased Exponentially Source: California Public Utilities Commission, 1st Quarter 2011

24. 50 MW thermal or larger? Coordinated State Level Review, including CEQA Less than 50 MW non-thermal? Select State Agency Review + Local Government Review (incl CEQA) 58 Counties, 120 Charter Cities Permitting in California is complex, particularly for smaller projects

25. Cost containment is a significant issue Cost of Renewable Contracts vs Market Price Referent (MPR) Under the 20% RPS rules, projects are compared to the Market Price Referent (essentially the generic price of a new 500MW gas-fried combined cycle gas turbine facility) to determine their “above ‐ market” costs More than half of all renewable contracts have prices in excess of the MPR. On average, these contract prices are 15% higher than applicable MPRs. The total costs of approved projects exceeded the targeted levels by over seven times The new 33% RPS law ends the use of Market Price Referent, but requires the CPUC to establish a limit on procurement costs for each utility 25 Source: CPUC, Divisions of Ratepayer Advocates, “Green Rush: Investor-Owned Utilities’ Compliance with the Renewable Portfolio Standard” February 2011

26. 26 Solar PV Project Prices Vary Note: cost assumptions developed in June 2010 for long-term resource planning, not market data Source: California Public Utilities Commission, 1st Quarter 2011 MPR

27. 27 The Future of Solar in California is Bright Distributed Utility-Scale Proxy Projects (20 MW) Large Centralized Proxy Projects (200 MW) Large Centralized Pre-Identified Projects (200 MW) Candidate Land

28. 28 The Future of Solar in California is Bright Distributed Utility-Scale Proxy Projects (20 MW) Large Centralized Proxy Projects (200 MW) Large Centralized Pre-Identified Projects (200 MW) Candidate Land

29. 29 July 31, 2009 Solar Rooftop Identification

30. 30 Solar Rooftop Identification

31. 31 Los Angeles Area “Rooftop Resources” Puente Hills Los Angeles Ontario Anaheim

32. 32 For Additional Information www.cpuc.ca.gov