California Distributed Energy Incentive Program Disproportionately Benefiting Fossil Fuels, Regulators OK With That

California Distributed Energy Incentive Program Disproportionately Benefiting Fossil Fuels, Regulators OK With That
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A California program designed to spur innovation in technologies for distributed generation of low-emission energy is disproportionately benefiting fossil fuels projects, primarily natural gas — and a new proposal to update the emissions threshold that determines which projects are eligible will not change that, critics of the program say.

Some 70 percent of the energy generation that has so far received rebates from California’s $83-million-a-year, ratepayer-funded Self-Generation Incentive Program (SGIP) has been fossil-fueled, according to the Sierra Club.

SGIP, administered by the California Public Utilities Commission (CPUC), provides rebates for distributed energy systems installed on the customer side of the utility meter — “behind the meter” in industry parlance.

To qualify for funding, distributed energy system providers must demonstrate that their technology’s greenhouse gas emissions fall below a certain threshold, ensuring that it’s cleaner than the grid energy it will replace.

Janice Lin, executive director of the California Energy Storage Alliance (CESA), says that the new GHG emissions threshold proposed by CPUC President Michael Picker is too high because it fails to properly account for California’s Renewable Portfolio Standard (RPS), which directs energy providers to increase procurement from renewable sources to 33 percent of the state’s total energy mix by 2020.

“If they had correctly factored in the 33 percent RPS,” Lin told DeSmog, “they would have arrived at a much lower emissions factor threshold.”

In one example cited in comments CESA and the Natural Resources Defense Council submitted jointly to the CPUC, a consumer using a distributed energy resource that adheres to the proposed GHG emissions factor could be responsible for as much as 23 percent more greenhouse gas emissions than if they were to simply stick with grid-supplied energy, which is easily on pace to achieve or surpass the existing target of 33% renewables by 2020.

What’s a Bloomdoggle?

Not only do fossil fuels, and natural gas fuel cells in particular, receive an outsize share of SGIP funds, but one company, Bloom Energy, has claimed more than $400 million of the $1.4 billion in total SGIP incentives, according to GreentechMedia.

Bloom’s “Bloom Boxes” turn natural gas into electricity, and have been installed by many corporate giants looking to “green” their operations, from Google and eBay to FedEx and Honda and WalMart. “If the SGIP‘s aim was to provide several hundred million dollars to a single VC-funded fuel-cell company, then it has succeeded — by classifying fuel cells as an ‘emerging technology,’” GreentechMedia writes.

Even the claims the company itself makes about Bloom Boxes’ emissions aren’t that impressive compared to California’s relatively clean electricity grid:

Bloom’s spec sheet lists CO2 emissions of 735 pounds (333 kilograms) to 849 pounds (385 kilograms) per megawatt-hour. (A typical new combined-cycle gas turbine plant emits about 913 pounds (414 kilograms) of CO2 per megawatt-hour. PG&E‘s most recent independently verified CO2 emissions rate of 445 pounds of CO2 per megawatt-hour (201 kilograms) is about one-third of the national average among utilities.)

One critic of Bloom Energy’s green credentials responded to the fact that so much California ratepayer money is going to buy Bloom boxes by calling it a “bloomdoggle.”

SGIP was originally created during the energy crisis in 2001 as a peak-load reduction program, but its mandate was modified in 2009 to focus on distributed energy technologies that reduce emissions of greenhouse gases. It was reauthorized in 2014 by the state legislature, which wanted the CPUC to update the eligibility threshold to address shortcomings in the program’s achieved emissions reductions and bring SGIP in line with the state’s ambitious climate and clean energy targets.

SGIP is now authorized to continue until 2021 and spend an additional $415 million in ratepayer funds on distributed energy resources that are expected to operate through 2030. Even the chairs of the key committees in the state legislature that reauthorized SGIP last year are critical of the proposed threshold. They wrote in a letter to CPUC President Picker:

Rather than updating SGIP with an eye toward achieving direct GHG emission reductions from the $415 million investment, as well as supporting innovations that will produce additional reductions and other public benefits, the decision requires a paltry five percent reduction in GHG emissions compared to the existing standard which is outdated and ineffective. In fact, the decision appears to be skewed to maintain eligibility for existing technologies operating on 100 percent conventional natural gas. We don’t think this is consistent with the state’s long term climate and energy goals.

By kowtowing to the wishes of natural gas fuel cell makers, the president of the CPUC could divert millions of dollars in SGIP subsidies away from less polluting technologies like energy storage, wind, and biogas fuel cells that are in line with the direction of California’s energy and climate policy. (Rooftop solar, or solar photovoltaic technologies, was moved under the California Solar Initiative when it launched in 2006.)

The Sierra Club’s Matt Vespa wrote in a blog post that the proposed threshold would allow projects with GHG emissions “close to 20 percent higher than a modern combined cycle facility” to continue receiving SGIP funding.

“There is simply no legitimate reason for California to be squandering millions to subsidize technologies that make the climate crisis worse,” Vespa told DeSmog. He suggests that, if the current proposal is adopted, SGIP might from now on stand for “Subsidizing Greenhouse gas Intensive Projects.”
 

Image Credit: BLACKDAY / Shutterstock.com

California Distributed Energy Incentive Program Disproportionately Benefiting Fossil Fuels, Regulators OK With That
Mike Gaworecki is a San Francisco-based journalist who writes about energy, climate, and forest issues for DeSmogBlog and Mongabay.com. His writing has appeared on BillMoyers.com, Alternet, Treehugger, Change.org, Huffington Post, and more. He is also a novelist whose debut “The Mysticist” came out via FreemadeSF in 2014.

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