CALIF TO R-A-M NEW ENERGY

California approves reverse auction renewable energy market
December 16, 2010 (Reuters)

"The California Public Utilities Commission…approved a unique reverse auction market [RAM] to let renewable energy developers bid on small-scale projects under a program that would generate up to 1,000 megawatts for the state’s three big investor-owned utilities and further spur the solar industry…

"The [auction] idea is to avoid problems with so-called feed-in-tariffs [FiTs] that set rates artificially high for renewable energy production. In Spain, for example, high rates spurred a solar building boom that was followed by a crash when a cap on renewable energy production was reached and rates fell."

The Gap (click to enlarge)

"Under the [auction] plan approved by California regulators, the onus would be on developers to calculate the cost of their projects and then offer a bid high enough to generate a profit yet low enough to beat out competitors. The 1,000 megawatts to be developed [enough to power about 750,000 homes] would be split between Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric…

"Dubbed a reverse action mechanism [RAM] by the utilities commission, the program applies to renewable energy projects that generate up to 20 megawatts of electricity. The hope is to encourage development of small-scale solar power plants that can be built relatively fast and plugged into the grid without major – and expensive – transmission upgrades…"

The R-A-M may fill The Gap without creating the market bubble the FiT is thought to risk. (click to enlarge)

"Developers must complete their projects within 18 months and deploy commercially proven technology…

"Adam Browning, executive director of The Vote Solar Initiative, a non-profit San Francisco advocacy group, said the new program fills a gap in California’s renewable energy program…[because while California] offers incentives for homeowners and businesses to install solar systems that generate up to 1.5 megawatts and utilities have signed contracts with developers to build big projects that will produce hundreds of megawatts each. Lost in the middle were [projects [between 1.5 megawatts and 20 megawatts]…"