Governor Schwarzenegger signs legislation for small-scale incentive law

California Governor Arnold Schwarzenegger has signed a law-enforced legislation to create a feed-in tariff designed for small solar-panel generators in the state. This type of incentive falls in line with its European counterparts, reports MarketWatch.

The sun-rich state already has fairly high utility rates and solar subsidy plans, yet this move to include smaller generators will push California forward in becoming even more successful in the global solar market. The new proposal seeks to expand the market by requiring California utilities to buy power from solar-panel generators of 1.5-3.0MW, at set rates above what the utilities would pay for wholesale power from conventional sources.

Although this seems like a plan motivated by market success, some solar companies have argued that the bill's pricing scheme (expected to create a FiT of approximately €0.15/0.17/kWh) is too low to promote significant investment. Others said the program would create opportunities for lower-cost projects for which there isn't currently a market.

There is however, a significant support for this policy. California Solar Energy Industries Association is just one source that said that the bill's FiT would be high enough for schools, local governments, farms, warehouses and other low-cost property owners to take advantage of it.

Suntech Power Holdings, SunPower, Applied Materials and other companies have alluded to their favour towards a separate effort at the California Public Utilities Commission to establish a FiT-type program as more viable. This is not unexpected, as these companies will be more interested in the large-scale installations.

The CPUC staff has proposed requiring the state's three large utilities, owned by PG&E, Edison International and Sempra Energy, to collectively buy 1,000MW of power from solar-panel generators sized between 1MW and 20MW over four years through "reverse auctions" in which they would pick the projects with the lowest bids to meet their requirements. The agency is still reviewing proposals for the program and could make a decision sometime next year.

In a letter to the state Senate, Governor Schwarzenegger said he was signing the bill because the state "will need to use all of the tools available" to meet its goal of using renewable sources for a third of electricity sold by utilities by 2020.

That said, the CPUC should proceed with its own feed-in tariff program, he said.

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