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Notice of Availability of Report

Building a "Margin of Safety" Into
Renewable Energy Procurements:
A Review of Experience with Contract Failure

(Publication No. CEC-300-2006-004)
Docket No. 04-IEP-1E and 03-RPS-1078


The above titled consultant report (Energy Commission Publication No. CEC-300-2006-004) summarizes experience with renewable energy contracts executed with investor-owned utilities, with publicly owned utilities, and as a result of government incentive auctions, focusing on the degree to which such contracts yield on-line and on-schedule renewable energy projects.

In the 2005 Integrated Energy Policy Report, the Energy Commission recommended that the California Public Utilities Commission require the state's investor-owned utilities to procure a prudent contract-risk margin of safety over and above the amount needed to meet their renewable procurement targets to account for the possibility of contract failure.

This report provides information to support further deliberations on the issue of contract failure and the possible need for over-procurement to help ensure that California's Renewables Portfolio Standard targets are achieved.

The consultant report is structured as follows:

  • Chapter 1 provides an introduction and background.

  • Chapter 2 describes the methodology used to collect data on renewable energy contracting, the specific sources and types of data sought, and the categorization used to identify the types, sources, and mitigation options for contract failure.

  • Chapter 3 reports on renewable energy contracting experience and success rates from California, from other North American utilities, and from government-run auctions for renewable energy. Available data are imperfect, but contracts included in the sample represent more than 21,500 megawatts of renewables capacity.

  • Chapter 4 draws some limited conclusions based on the data collected.

The report was prepared by Kema, Inc., and its consulting team as the result of work sponsored by the California Energy Commission. It does not necessarily represent the view of the California Energy Commission, its employees, or the State of California. The California Energy Commission, the State of California, its employees, contractors and subcontractors make no warranty, express or implied, and assume no legal liability for the information in this report; nor does any party represent that the uses of this information will not infringe upon privately owned rights. This report has not been approved or disapproved by the California Energy Commission, nor has the California Energy Commission passed upon the accuracy or adequacy of the information in this report.

This document is available free from the Energy Commission's Web site at:

www.energy.ca.gov/portfolio/documents/

A printed copy is available for $5.00. Please send request and check or money order made out to the California Energy Commission to:

California Energy Commission
Re: Publication # CEC-300-2006-004
Publications, MS-15
1516 Ninth Street
Sacramento, CA 95814-5504

Please call the Publications Unit at (916) 654-5200 with any questions. News media should direct inquiries to Claudia Chandler, Assistant Executive Director, at (916) 654-4989. For technical questions regarding the subject matter of this consultant report, please contact Heather Raitt by phone at (916) 654-4735, or by e-mail at [hraitt@energy.state.ca.us].

Mailing List: 5507 Renewables Portfolio Standard

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