Pursuant to Senate Bill 32 of 2009, the California Public Utilities Commission (CPUC) implemented the Renewable Market Adjusting Tariff (Re-MAT) program on July 24, 2013. The Re-MAT program is a Feed-in Tariff (FiT) through which customers can sell electricity produced by qualifying facilities* directly to the utility at a set rate for a term of 10, 15, or 20 years. The bill also raises state renewable energy targets from 500 MW to 750 MW, and increases the size cap on qualifying energy facilities from 1.5 MW AC to 3 MW AC. All investor owned utilities (IOUs) in California with more than 75,000 customers must participate in the program. Although all qualifying facilities are eligible to participate in the program, it is clear that solar will play a large role given the amount of attention the program has already gained with developers in the state.
The first round of solicitations for the Re-MAT program will begin on October 1, 2013, and will continue every two months thereafter until it is fully subscribed. The amount of time it takes for the program to become fully subscribed will depend on the ability for projects to be financed at the set energy price, which is one of the more unique aspects of the program. The base price is currently set at $89.23/MWh, pre-Time of Delivery (TOD) adjustments. This price is subject to adjustment after every solicitation depending on program participation.
If 100% or more of the program’s capacity in a given period is subscribed, the tariff rate will decrease by $4/MWh for the next subscription period. If the allocation for the next period is subscribed by 100% or more, the rate will then decrease by $8/MWh, and then $12/MWh if the same occurs in the third solicitation. Conversely, if program interest is low and less than 20% of capacity in a given period is subscribed; the tariff rate will increase by $4/MWh. If this trend continues into the second and third subsequent periods, the rate will increase by $8/MWh and $12/MWh respectively. If program subscription is above 20% and a price decrease is not triggered, the price will remain unchanged.
In order to help manage oversubscription of the program, the IOUs in California stipulated several eligibility requirements that limit access to the program. One major requirement of note is that applicants must have a completed System Impact Study and the transmission system network upgrades associated with the System Impact Study cannot exceed $300,000. Additionally, the applicant must be able to show site control through a lease, direct ownership, or an option to lease or purchase the site upon execution of a PPA with the utility. Outside of project details themselves, the IOUS have included qualifications for the developer applicants by requiring all developers to show experience in developing projects of a similar size to the proposed project.
These eligibility requirements act as a great measure for the success of a project, and prevent many unfinanceable projects from taking a spot away from much more attractive projects. If a developer has a project that meets and exceeds these requirements, early coordination between solar investors and developers could put projects in a better place for both the application process and final completion.
Sol Systems will continue tracking this program for our investor and developer clients in order to better advise on the application process and to enhance communication between investors and developers as projects pursue contracts. If you have a project that will be submitted into the program, please contact our team at firstname.lastname@example.org or (888) 235-1538×2. Our team is happy to discuss your project with you and assess financing opportunities.
*Qualifying Facilities are defined by The Public Utility Regulatory Policies Act of 1978 (PURPA).
About Sol Systems
Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has facilitated financing for thousands of projects and hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals. For more information, please visit www.solsystemscompany.com.