The California Public Utilities Commission (CPUC) recently approved a pilot program through which prices will be set for electricity coming from renewable energy resources.
Under the so-called Reverse Auction Mechanism (RAM), renewable energy project developers must bid to earn the right to sell clean electricity to utilities. Unlike a feed-in tariff — which guarantees a set rate for clean power regardless of project details –the RAM incorporates the element of competition. Feasible projects that can deliver clean power at a low, fixed rate will succeed, while projects that are more costly or less feasible will, in theory, fail.
The RAM is a good win. It promises to keep the incentives of project developers aligned with those of the broader public. And it will help prevent inefficient developers from establishing a dominant place in the market; when several electricity providers are competing for the same area, prices will come down. The system also ensures that, provided they can compete, small scale renewable energy developers won’t necessarily be pushed out of service areas by larger developers.
Projects between 1.5 and 20 megawatts (MW) can participate in the RAM, which is expected to help California meet its goal of meeting 30 percent state’s electricity with renewable sources by 2020. The CPUC hopes to install another 1,000 MW of solar energy capacity throughout the entire through the program.
I’m just not sure if RAMs are effective knowing what we know about the true cost of GOOD solar. We don’t want to create incentives to buy cheap and often less efficient panels, thats the downfall of RAM and something FIT dont do.