"The California Public Utilities Commission (CPUC) yesterday approved the program details to implement the Renewable Auction Mechanism (RAM), a new procurement method that will help lower transaction costs and promote the development of system-side renewable distributed generation projects of up to 20 megawatts (MW) in size." This is for PG&E, SCE and SDG&E.
Unfortunately, what was approved is a reverse auction process (seller with lowest price wins the PPA from the utility) that covers each utility's service area -- the entire service area, with no further breakdowns. My prediction is the most competitive bids will be for projects located in the rural parts of each utility's service area -- generally not where one would want a lot of "distributed generation". How can a new 10-acre project (~1MW) on $100,000 per acre land compete on price with a project on $10,000 per acre land? The more expensive land would represent approximately 25% of project cost, whereas the less expensive land would represent only 2.5% of project cost. In fact I would venture to predict there will be very few, if any, winning projects located in the LA Basin (to pick a sub-area).
This issue will have to be addressed soon if California is to have large amounts of renewable distributed generation in the right places.
