Lawmakers Criticize Low Bar for SGIP Energy Subsidy

The president of the California Public Utilities Commission (CPUC) is under fire from some state lawmakers for a recent proposal they say doesn’t go far enough to reduce greenhouse gases.

Michael Picker introduced new pollution limits last month for technologies that qualify for subsidies under the CPUC’s Self-Generation Incentive Program (SGIP). The program is funded by utility ratepayers who get charged a green energy fee on their power bills every month. SGIP subsidies help fund emerging technologies that cut carbon emissions. But three state lawmakers warn that Picker’s plan fails to meet California’s aggressive environmental objectives.

Assemblymen Das Williams, Richard Bloom and Anthony Rendon blasted Picker’s proposal, which requires a five percent reduction in greenhouse gas emissions from the current standard. The lawmakers and other stakeholders, such as environmental groups, say a carbon reduction greater than 20 percent is more consistent with the state’s aggressive energy goals.

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In a letter the assemblymen urged Picker to “do better” for ratepayers and the environment. “If your decision is adopted,” wrote the assemblymen, “SGIP will continue the absurd practice of subsiding natural gas consumption, supporting existing technologies that have already taken hundreds of millions of dollars from SGIP.”

At stake is $415 million in additional incentives that the legislature reauthorized through 2020. The CPUC has already funneled $1.4 billion in subsidies to companies since 2001, including nearly $400 million to Sunnyvale-based fuel cell maker Bloom Energy. Over the life of the program, Bloom has received 27 percent of total SGIP subsidies—the lion’s share of the funds.

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Since Bloom began applying for SGIP funds in 2007, the company has benefited from a lot of incentives in a short period of time. Bloom received 49 percent of SGIP incentives since 2007.

“We should not have our public institutions using our money to prop up polluting technologies,” said Matt Vespa, a senior attorney with the Sierra Club.

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Vespa and other environmentalists have criticized the CPUC for directing SGIP incentives to fuel cell makers—such as Bloom Energy—whose technologies primarily run on natural gas.

“Natural gas isn’t clean, its very carbon intensive,” he said. “Those should not get public money. We need to move past the era of fossil fuels. And to the extent that we still use them, okay. But should we subsidize them? Absolutely not.”

The NBC Bay Area Investigative Unit analyzed Bloom Energy’s projects that have received incentives under SGIP. Data show 81 percent of them run on natural gas. The others run on renewable fuel.

Vespa and other environmentalists say instead of subsidizing technology where the majority of projects use fossil fuels, SGIP should provide incentives to companies whose technologies run on biogas.

“The more that these carbon intensive projects take this money away the less is going to the clean technology we really need to meet our carbon objectives,” Vespa said. “Things like energy storage, small scale wind, and biogas that runs off the methane from landfills and dairies.”

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The Investigative Unit first examined Bloom Energy last fall and found the company was benefiting from the largest percentage of SGIP incentives. NBC Bay Area also exposed that the company’s fuel cells, called Bloom Boxes, were emitting more carbon than advertised. After the NBC Bay Area investigation aired, Bloom revised its emissions estimates on public data sheets posted on the company’s website.

“I’ve heard this project called a ‘Bloomdoggle’ and I don’t think it’s that far off from the truth,” Vespa said. “A big fraction of this money is going to a single company that has a fairly polluting product.”

Numbers show Bloom’s fuel cells may not be much cleaner than California’s current grid emissions. The state’s carbon emission rate is defined in the amount of carbon dioxide (CO2) that a technology emits per megawatt hour (MWh).

California’s average emission rate is 799 lbs CO2/MWh, according to 2013 figures, the most recent data available from the state’s Air Resources Board.

PG&E’s published emission rate for 2013, the most recent calculations available, is 427 lbs CO2/MWh.

Bloom Energy advertises that the emission rate for its technology ranges from 735 to 849 lbs CO2/MWh.

Williams, who chairs the assembly natural resource committee, says that rate is not good enough to continue to benefit from ratepayer money.

“We cannot be in the business of subsidizing something unless it’s cleaner than the grid,” Williams said.

He says SGIP’s objective is to reward technologies that innovate and get cleaner. He says he is confident that Bloom’s fuel cells can meet stricter pollution goals, but believes the company will only do so if the program’s standards become more stringent.

“One of the founders [of Bloom Energy] said we can meet a higher standard, just set a standard and we’ll meet it,” Williams said. “I am in strong words asking the PUC, hold them accountable. Have them meet a higher standard.”

Bloom declined requests for an interview, but pointed out in an email that the CPUC is responsible for measuring SGIP’s success based on a variety of factors, not just carbon reductions. Those factors include improving electric reliability, reducing peak electricity demand and avoiding cost upgrades to the grid.

The company wrote in a statement that its technology “fully meets all of the requirements of the program” and that the CPUC reported that Bloom is the “single participating technology that has provided the greatest benefit in reducing GHG emissions.”

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The company added, “Bloom is proud that our technology has significantly reduced carbon emissions for our customers and is the largest contributor to GHG reductions in the SGIP program.”

The company says that Picker’s proposed carbon emission standard would not exclude Bloom’s technology from SGIP. But in public comments Bloom asked the CPUC not to change the standard at all, not even by the five percent reduction the commission president proposed.

“Bloom supports a standard that ensures real, measurable reductions today and in the future,” a Bloom representative wrote in an email. “The current standard does that and enables multiple low emission technologies to participate in the program, which is why Bloom supports the PUC maintaining that requirement.”

Picker told NBC Bay Area that he doesn’t know whether he’ll revise his proposal and that he will consider comments from all sides of the debate. The CPUC is expected to take up Picker’s SGIP plan at a commission meeting on August 27.

“We will never make everybody happy on most of the things we’ll do,” Picker said. “This has always been a fairly controversial program. A lot of technologies are new, they are getting cleaner and cheaper, and it’s very difficult to choose which technologies are winners and losers.”

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