California Solar Rebates Tripled for Next Year

Vote to allocate $300 million for next year is first stage in new, long-term solar plan

by Jesse Broehl, Editor, RenewableEnergyAccess.com

December 16, 2005

Rebates for large solar projects in 2006 over 30 kW, like this RWE project, have now been tripled from current funding levels.

Photo: Schott Solar

While the $300 million for next year is now official, the vote to approve the larger, long-term CSI plan is not until January 12.

Los Angeles, California [RenewableEnergyAccess.com] The California Public Utilities Commission (PUC) voted on Thursday to approve $300 million for statewide solar rebates for 2006. While these funds will be administered under the current rebate structure that has been in place for the past few years, it also acts as a first-stage transition into an entirely new solar policy called the California Solar Initiative (CSI).

The approval of $300 million effectively triples what had been originally allocated for 2006 and acts an interim step to ensure uninterrupted solar market growth during the transition to the long-term program that will run from 2007 through 2016. This long-term program was announced on Tuesday by the PUC and reported on by RenewableEnergyAccess.com in a related story (see link below).

Rebates beginning next year will stay at the $2.80 per watt mark and will gradually decline for the following ten years. By design, the rebates will decline by 10 percent per year through the duration of the program, but the PUC rebates are expected to move from a capacity-based approach to a performance-based approach, arguably a more efficient system.

This $300 million sum is directed to the PUC's Solar Generation Incentive Program (SGIP) that mandates that investor-owned utilities provide rebates and administration of solar rebates for solar photovoltaic systems over 30 kW.

Separately, the California Energy Commission (CEC) administers the Emerging Renewables Program (ERP) which provides similar rebates but for projects below 30 kW, typically on homes and businesses. According to the Solar Energy Industries Association (SEIA), $58 million remains available for 2006. Beyond 2006, however, both programs will change substantially. See the link following this story for a related article explaining the CSI program.

The CSI plan effectively supplants two of the critical features that were present in the ill-fated "Million Solar Roofs Initiative" or SB 1, which failed twice in the California legislature: it provides a long-term rebate structure and it provides funds totaling $3.2 billion for the plan (PUC and CEC funds combined 2006-2017).

The CSI plan does not include a mandate that new homes in California include solar energy, nor does it include any licensing changes to who is eligible to install solar projects in the state. It also does not require that solar installation work be done as so-called "prevailing wages," essentially union wages. All three items exposed and exacerbated deep opposition between the majority of the solar industry and certain union interests that backed the proposals.

While the $300 million for next year is now official, the vote to approve the larger, long-term CSI plan is not until January 12. After its announcement yesterday, the plan has officially entered a one-month public comment period. Industry sources indicate it is very likely to receive a unanimous vote on that date. PUC policy is a top down approach and operated independently of the legislature, a major reason why it is expected to pass.

Once passed, it will secure a stable solar market in California for the next 11 years and is expected to lower the overall price of photovoltaics while offering California the myriad benefits of this clean energy resource. The plan would be the largest solar energy policy ever enacted in the U.S. and the second largest in the world, behind Germany's renowned rebates.

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