In response to new state legislation (SB 412), California regulators on Thursday revised the state’s incentive program for on-site power generation, allowing up to 25% of the awards to go to nonrenewable combined heat and power (CHP) self generation that includes natural gas-fired cogeneration.

The new criteria for the Self-Generation Incentive Program (SGIP) are based on greenhouse gas (GHG) emissions reductions, including wind turbines, fuel cells, organic rankine cycle/waste heat capture (cogeneration), pressure-reduction turbines, advanced energy storage, CHP gas turbines, micro-turbines and internal combustion engines.

Participants will receive up front and performance-based incentives with limits set by the California Public Utilities Commission’s (CPUC) latest eligibility criteria, incentive amount limits and payment structures for the SGIP.

As part of the CPUC’s action on the 10-year program, SGIP also will be extended for four years through 2015. The program otherwise would have expired Jan. 1. The five-member regulatory commission unanimously approved the extension and changes, but each commissioner expressed some reservations.

Individual incentive awards are limited to $5 million, and allocation of the overall ratepayer-supported incentive dollars annually is to be split 75% to renewable and emerging technologies and the rest going to conventional CHP technologies using nonrenewable fuels, such as natural gas. Fuel cell and energy storage technologies will be included in the nonrenewable category.

CPUC President Michael Peevey called the latest action “a team effort” between his agency and the California Air Resources Board as both state organizations work toward achieving California’s 33% renewable portfolio standard (RPS) goal in 2020. “It is wise to look at renewable energy not only as a means to reduce the need for construction of additional power plants but also as a means to reduce our GHG emissions,” Peevey said.

Commissioner Mike Florio said the changes have many positive aspects. But he was concerned that the program had been overrun by private interests, possibly at the expense of its public purpose, he said, adding that only a few years ago the SGIP program had a surplus in its budget and the money was not being allocated, but now the demand for the program dollars “seems immeasurable.”

Florio urged his colleagues to “keep an open mind” regarding making further adjustments in the program if the need arises in the future.

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