California Solar Initiative Adds Performance Based Incentive in 2007

Beginning January 1, 2007, a ruling by the California PUC establishes performance-based incentives (PBI) of up to 50 cents/kilowatt-hour over five years for solar energy systems greater than 100 kilowatts in size installed in businesses and other large facilities. For systems smaller than 100 kilowatts, incentives will be based on each system's estimated future performance although projects can opt-in for PBI payments.

The August 24th decision implements the first phase of the California Solar Initiative, which was adopted by the Public Utilities Commission in January 2006 [see previous story in Democratic Energy]. The goal of the Solar Initiative is to increase the amount of installed solar capacity in California by 3,000 megawatts by 2017.

Beginning Jan. 1, 2007, residential and small commercial systems will receive upfront incentives of $2.50 per watt and will be eligible for additional federal tax credits (although any system can opt in to the performance based rates if they think they will get more financial benefit). Government and non-profit organizations will receive $3.25 per watt to compensate for their lack of access to the federal tax credit. For systems larger than 100 kilowatts, incentive payments over the first five years of operation will be $0.39 per kilowatt-hour of output for taxable entities and $0.50 per kilowatt-hour of output for government/non-profit organizations.

The level of performance based incentives (PBI) and the upfront payments will decline in 10 steps based on how much solar power is added to the state's electricity system. The performance-based incentives schedule looks like this:

More

• Full Text of the Decision Adopting Performance-Based Incentives, An Administrative Structure and Other Phase One Program Elements for the California Solar Initiative - issued by the California PUC, August 24, 2006
• Fact Sheet on the California Solar Initiative Decision - issued by the California PUC, August 24, 2006
• Other Documents and Decisions in the California Solar Initiative Proceeding- (PUC Docket R06-03-004)