California Solar Initiative

The California Public Utilities Commission (PUC) refined details of the California Solar Initiative (CSI) established by the Commission in January 2006.

1. There will be performance-based incentives that reward quality solar systems.

• Starting January 1, 2007, incentives for all solar energy systems greater than 100 kilowatts in size will be paid monthly based on the actual energy produced.
• Incentives for all systems less than 100 kilowatts will initially be paid up-front based on expected system performance. Expected performance will be calculated based on equipment ratings and installation factors, such as geographic location, tilt, and shading.
• Starting in 2010, incentives for all systems greater than 30 kilowatts in size will be paid based on actual energy produced.

2. The incentive levels for 2007 factor in the impact of federal tax incentives.

• Residential and commercial customers will receive incentives of $2.50 per watt and will be eligible for additional federal tax credits.
• Government and non-profit organizations will receive $3.25 per watt to compensate for their lack of access to the federal tax credit as non-taxable entities.

3. The schedule reduces incentives over the 10 years of the CSI.

• Incentives will automatically decrease in 10 steps based on the quantity of solar energy systems installed.

4. The funding levels will be determined by type of project and location.

• One-third of CSI funds will be reserved for residential solar installations.
• Incentive levels may vary in future years by utility area and customer segment based on the pace of solar demand.

5. The program will be administered by the utilities.

• The CSI will be managed by the existing self-generation incentive program administrators – Pacific Gas and Electric Company, Southern California Edison, Southern California Gas Company, and the San Diego Regional Energy Office. The administrators will develop a statewide online application process.
• The PUC will consider possible statewide marketing and consumer outreach in the second phase of the proceeding, and may reconsider regional or statewide administration approaches in the future.

 6. Metering will be required to monitor solar production.

• All solar energy systems will be required to install separate meters to measure solar output.

An upcoming CSI rulemaking will address energy efficiency requirements; incentives for non-photovoltaic solar projects; affordable housing incentives; marketing and outreach plans; research, development and demonstration plans; and the methodologies for cost-benefit analysis and renewable energy credits determinations.

Incentives

Incentives will be disbursed based on the rates displayed until market demand pushes the program to the next step, in which case incentives are reduced, as illustrated in the charts below. For instance, once 70 megawatts of solar energy systems are installed in Step 2, incentives will drop to those applicable in Step 3. Once another 100 megawatts of solar energy systems are installed in Step 3, incentives will drop to Step 4. Step 1 began in February 2006, and the PUC expects to reach Step 2 later this year. These allocations have been further allocated by utility service area and residential versus non-residential installations.

Small System Incentive Schedule (per watt; for systems initially less than 100kW)

Step	MW per step	Residential	Commercial	Non-Taxable
1	50	n/a	n/a	n/a
2	70	$2.50	$2.50	$3.25
3	100	$2.20	$2.20	$2.95
4	130	$1.90	$1.90	$2.65
5	170	$1.55	$1.55	$2.30
6	230	$1.10	$1.10	$1.85
7	300	$0.65	$0.65	$1.40
8	400	$0.35	$0.35	$1.10
9	500	$0.25	$0.25	$0.90
10	650	$0.20	$0.20	$0.70

Large System Performance-Based Incentive Schedule^[*] (per kilowatt-hour)
Step MW per step Residential Commercial Non-Taxable

Step	MW per step	Residential	Commercial	Non-Taxable
1	50	n/a	n/a	n/a
2	70	$0.39	$0.39	$0.50
3	100	$0.34	$0.34	$0.46
4	130	$0.26	$0.36	$0.37
5	170	$0.22	$0.22	$0.32
6	230	$0.15	$0.15	$0.26
7	300	$0.09	$0.09	$0.19
8	400	$0.05	$0.05	$0.15
9	500	$0.03	$0.03	$0.12
10	650	$0.03	$0.03	$0.10

* Schedule is initially used for systems 100 kW or greater; smaller systems may also opt-in to this schedule to receive greater incentives for high performance.

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