It's rather fitting that California's state animal is the grizzly bear. The Golden State has been one of the hardest states hit by the recession, with unemployment rising to 12.2% in August, and budget woes mounting.

Despite these macro difficulties, California has not abandoned its very ambitious renewable energy goals. Last month, Governor Schwarzenegger signed an executive order boosting the state's Renewable Portfolio Standard to 33% by 2020. This week, the state took several steps to advance its arguably quixotic quest.

On Sunday, the Governator signed a bill that allows homeowners to get paid by utilities for the excess electricity generated by their solar arrays (or wind installations). Utilities like Pacific Gas & Electric (NYSE:PCG) already credit customers for excess generation under current net metering rules, but unused credits get wiped out at the end of the year. Now utilities have to either roll those credits over, or pay for the excess electricity.

Another piece of legislation signed into law on Sunday expands the state's feed-in tariff (FIT), which was launched last year. The project cap has been doubled from 1.5 megawatts to 3 megawatts. That keeps the focus on homeowners and commercial users like Wal-Mart (NYSE:WMT) and eBay (NASDAQ:EBAY), rather than higher-profile utility-scale projects that run into the hundreds of megawatts. The FIT program is also now capped at 750 megawatts, up from 500 MW.

Last year, the consensus was that California's FIT rate was set too low, since utilities were only required to offer the going rate for electricity from a gas-fired power plant. The result, according to California's Public Utilities Commission (CPUC): "While this program has been effective at attracting landfill gas, small hydro, and some biomass and small wind projects, the program has not resulted in any solar development."

This new iteration of the FIT offers little in the way of improvement. A spokesman from Suntech Power (NYSE:STP) confirmed this, commenting that the bill "won't result in a high enough fixed price to stimulate solar projects." The head of First Solar (NASDAQ:FSLR) backed SolarCity, a leading installation firm that's going great guns lately, was also definitive in its dim assessment of the program.

Companies like SunPower (NASDAQ:SPWRA) and Recurrent Energy appear to be holding out hope for an alternative FIT plan, proposed by CPUC this past August. The commission is pushing for a market-based pricing mechanism, in which projects would go to the lowest bidders at auction. Yingli Green Energy's (NYSE:YGE) showed the pitfalls of such an approach, but I do think this could be a powerful program if crafted correctly.

Wal-Mart is an Inside Value selection. First Solar and Suntech Power are Rule Breakers recommendations. eBay is a Stock Advisor pick. See if you take a shine to any of our newsletters with a free 30-day trial.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile, or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.