California regulators are looking at expanding a program that pays for renewable power generated by utility retail customers such as wastewater treatment agencies.

The staff of the California Public Utilities Commission has proposed to make the program available to renewable power projects between 1.5 megawatts and 10 megawatts in generation capacity. The CPUC created the original program in 2007 and put it into effect in 2008, and the program now applies only to projects up to 1.5 megawatts in size.

The CPUC published the staff's proposal last Friday for public comment in the next few weeks. After reviewing the public comments, administrative law judge Burton Mattson plans to issue his own proposal for the whole commission to vote on.

The program, typically called a feed-in tariff, is one of several by the state to promote renewable energy generation. The concept isn't new. In fact, feed-in tariff programs have been in Germany and Spain for years, and the lucrative incentives have made them the world's top two solar energy-producing countries. In those countries, utilities are required to buy all the solar power that is available for sale.

The California program is more limited in scope. It aims to make it easier for small renewable energy producers to sell solar, wind or other renewable electricity to investor-owned utilities such as Pacific Gas and Electric, Southern California Edison and San Diego Gas and Electric. Those utilities have been signing contracts with developers of large-scale projects (hundreds of megawatts each), and they use a different process that requires them to seek competitive bids and obtain the CPUC approval for each contract.

The feed-in tariff program was initially available only to renewable power systems owned and operated by water and wastewater agencies. But the CPUC expanded the program last year to include other retail customers, but only those located within the PG&E and Edison territories.

The program hasn't been all that popular, however. Owners of small solar energy systems, such as homeowners, are likely to get better incentives through a state rebate program and net-metering rules that are administered by utilities (you can't participate in both feed-in tariff and net metering programs at the same time).

The feed-in tariff program currently sets a standardized contract for buying power from power projects up to 1.5 megawatts in size, and the program has a cap of 500 megawatts. The commission staff's proposal calls for creating a standard contract for projects more than 1.5 megawatts and up to 10 megawatts. It would cap the expanded program at 1,000 megawatts.

"This is a good start in the right direction," said Adam Browning, executive director of Vote Solar, a San Francisco-based advocacy group that focuses on state legislation across the country. "What the state is coming out with is a significant new program which could initially add another 1,000 megawatts to the grid."

Although the feed-in tariff program can apply to different types of renewable power generation, including wind and hydropower, its scope makes it more applicable to solar energy production, Browning said.

A key element is missing from the proposal to expand the program: The prices for buying the power from the larger projects. In its written proposal for expand the program, the commission staff said the CPUC will need more time to consider the costs and risks before settling on the prices.

While the existing feed-in tariff program applies to all investor-owned utilities, the proposed addition to the program would only apply to the three large utilities mentioned above. The CPUC staff said other investor-owned utilities are too small to be required to buy power from larger-scale projects.

The commission staff's proposal also calls for requiring power producers to sell all of the electricity they generate. The exiting program allows power producers to use what they generate and sell the extra to utilities (or they can sell all they can generate). The commission staff said a mandate to sell all the power is important for utilities to carry out long-term planning for meeting the state's renewable energy mandates.

The staff also proposed a process that would make it easier for the three utilities to easier to close deals for buying power from projects between 10 megawatts and 20 megawatts. Under the proposal, the utilities could use a standard contract and sign it without first gaining approval from the CPUC. The utilities would advise the CPUC of the contracts in writing, and the contracts would become effective 30 days after if the commission has no objection.

Projects between 10- and 20-megawatt wouldn't be eligible for to receive the feed-in tariffs.

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