1. California’s Public Interest Energy Research Program Vice Chair David A. Rohy, Ph.D. California Energy Commission February 1, 1999

2. Why Change the System? b High electricity rates in California b Demand for different qualities b Incentive for efficiency b Creative unbundling

3. Electric Rates in California Compared to the U.S. ( cents per kWh)

4. Restructuring Legislation b b Independent System Operator b b Power Exchange b b Public Purpose Goals b b Recovery of Stranded Costs

5. What Changes in R&D? b Funding of $61.8 million per year comes from electricity surcharge b Run by CEC, not utilities b 5 subject areas: – End-Use Efficiency –Advanced Generation –Renewables –Environmental –Strategic

6. Mission and Goals: What Are We Looking For? Provide Benefits to California Ratepayers b Reduce cost, increase value b Increase reliability b Improve environment b Provide market connection b Enhance economy b Advance science & technology not provided by competitive & regulated market

7. Eligibility: Who Qualifies? b Need not be a California company b Provide benefits to California ratepayers b Exceed best practice or product improvement b Balance benefits to consumer sectors b No maximum or minimum funding amount b Variable matching funds expected

8. Teams to Focus on Six Program Areas b Industrial/Agricultural (process energy, food processing, irrigation) b Buildings (Residential and Commercial) b Environmental (impacts from energy production and use by increasing population) b Advanced Generation ( includes distributed gen.) b Renewables (cost-effective technology) b Strategic Research (reliability, cross-cutting)

9. Advanced Generation Example Alzeta Corp., Low NOx Combustor b Goals: Lower NOx to 2 ppm on gaseous fuels (5.5 ppm on liquid fuels)Lower NOx to 2 ppm on gaseous fuels (5.5 ppm on liquid fuels) Lower cost of emission reduction by $100/kW for smaller facilitiesLower cost of emission reduction by $100/kW for smaller facilities b Funding $878,788 from PIER$878,788 from PIER $195,000 from DOE$195,000 from DOE $480,000 from Other$480,000 from Other

10. Environmental Example EPRI: Global Climate Change b : Reduce environmental impacts of energy production, distribution and use b Goal: Reduce environmental impacts of energy production, distribution and use b : b Tasks: Assess potential impacts on human health, agriculture and ecosystemsAssess potential impacts on human health, agriculture and ecosystems Quantify cost of climate change proposalsQuantify cost of climate change proposals b Funding: $ 2.2 million from PIER$ 2.2 million from PIER $28.4 million from match$28.4 million from match

11. Strategic Research Example Engineering Data Management, Inc. Rating System for Overhead Lines b Goal: Improve safety & reliability of T&D systemImprove safety & reliability of T&D system b Task: Develop sensors to monitor conductor clearance and sagsDevelop sensors to monitor conductor clearance and sags b Funding: $499,402 from PIER$499,402 from PIER $510,019 from match$510,019 from match

12. Renewables Example The Wind Turbine Company Next Generation Turbine Development b Goal: Produce wind power for 3.5 cents/kWhProduce wind power for 3.5 cents/kWh b Task: Design, test WTC 350 wind turbineDesign, test WTC 350 wind turbine b Funding: $950,000 from PIER$950,000 from PIER $4.5 million from DOE$4.5 million from DOE $2.4 million from other match$2.4 million from other match

13. $51 Million in Projects, by Area In Three Solicitations (in millions of dollars)

14. Success in Leveraging Funding In Two General Solicitations b Total Project Cost $102.7 million $102.7 million b PIER Funding $ 31.9 million b DOE Funding $ 11.4 million $ 11.4 million b Other Match $ 59.3 million

15. Choice of Funding Options b Conventional Competitive Contracts b Negotiated Competitive Contracts b Sole Source Contracts b Interagency Agreements b Membership Agreement b Small Grants Innovation Program

16. External Evaluation and Review Ensuring Accountability b Policy Advisory Council Composed of 14 membersComposed of 14 members Represents broad public interestRepresents broad public interest Provides input and advice, not decisionsProvides input and advice, not decisions b Independent Review Panel Required by law to conduct comprehensive evaluation of PIER programRequired by law to conduct comprehensive evaluation of PIER program Nine members selected to dateNine members selected to date