California is far and away America's leading state for solar and renewable energy. The state's aggressive push to clean up its environment has been a model for other states to follow, and many of California's solar rebates and incentives have been copied elsewhere. California now produces roughly two-thirds of all solar electricity produced in the United States. Here's how they continue to be a solar role model for the US and the world.
California Solar Initiative - PV Incentives
One of the more ambitious incentive programs in the nation, allocating $3.2 billion over 10 years, is California Solar Initiative (CSI). It has greatly facilitated California's rapid solar ascension. Eligible solar systems include solar space heating, solar thermal electric and photovoltaics.
There are two ways to take advantage of the rebates:
#1 - Expected Performance Based Buy-Down (EPBB) is for systems with less than 50kW capacity. The up-front, one-time rebate began at $2.50/W-AC (adjusted based on expected performance), but declines by $0.30 increments. There are 10 incremental drops depending on the number of solar systems installed. In other words, the closer California get to its goal of 3000MW, the lower the rebates will be. Current rebate levels (as of May 2010) for EPBB systems vary by utility:
Utility incentive rates decrease as each utility gets closer to its solar power goals. For more information on where these utilities stand and future incentive levels see CSI's Statewide Trigger Point Tracker.
#2 - Performance Based Incentives (PBI) are for systems of 50 kW or larger. Under this program, rebates are paid on a monthly basis with the rebate depending on that month's performance. Note that smaller systems (<50kW) can opt for the PBI option, but larger systems cannot choose the EPBB. Performance-based incentives also decline over the span of the 10 years. Again, check the CSI Tracker to find current incentive levels.
Two Important Notes:
California Solar Initiative - Solar Water Heating Incentive
In January of 2008, the CSI handbook was edited to allow rebates for non-PV solar technologies, which produce or displace electricity, such as those mentioned above (Thermal, Space heating/cooling). However, solar hot water heaters, which can also displace electricity, were excluded. Following enactment of the new rule, The California Public Utilities Commission (CPUC) completed a pilot program in the San Diego area which has become the basis for current incentives for solar hot water systems.
Rebates are performance-based and vary depending on the type of energy displaced. Systems that replace natural gas water heaters receive $12.82 per estimated therm displaced. Systems displacing electric water heaters receive $0.37 per estimated kWh displaced. Maximum incentive for gas-replacing water heaters is $1,875 and $1,250 for their electricity-replacing counterparts.
All systems must be SRCC certified and installed by a licensed contractor who is eligible for the program. Self-installations are allowed so long as the homeowner attends a designated CSI-Thermal Program training workshop.
CSI began accepting applications for its new Solar Water Heating Rebate Program on May 1, 2010. $350 million are allocated for the program, with $250 million of that funding reserved for solar water heaters replacing conventional natural gas powered water heaters.
New Solar Homes Partnership (NSHP)
The NSHP is a set of tax rebates ($400 million over 10 years) geared toward California's builders and new construction. It covers PV only and targets single-family, multi-family, and low-income residential construction. Incentive amounts vary based on the type of housing and expected system performance. NSHP homes must be at least 15% more energy efficient than current building standards, although builders are encouraged to reach 35% above average efficiency.
Minimum system size is 1 kilowatt AC capacity, and systems must be designed not to exceed the home's expected electricity needs. They must be grid-tied and installed by a licensed California solar contractor, although self-installs are also allowed. The NSHP guidebook is available to answer more specific questions regarding contractors and system eligibility. Incentives are paid to builders and passed down to new homeowners through lower housing costs and energy savings.
Tax Incentive - Property Tax Exclusion for Solar Energy Systems
Under California tax law, solar water heaters, solar space heat, solar thermal electric, solar thermal process heat, PV and solar mechanical energy are all exempt from property taxes. 100% of the system value added to a home is exempt, 75% of which for dual-use equipment. The exemption also includes systems added by a builder during new construction. As of right now, the tax incentive expires at the end of 2016. See the California State Board of Equalization for more information.
PACE Financing - Local Option
Modeled after a municipal solar incentive program created in Berkeley, Property Assessed Clean Energy programs allow homeowners to borrow from the city to pay up-front costs for home solar power systems. The homeowner then pays the loan back through a voluntary increase in property taxes over the long term (typically about 20 years). California has passed a law allowing all cities and/or counties in the state to develop their own version of the PACE program. Several entities, including San Francisco, Oakland, Palm Desert, Sonoma County and Berkeley, have already embraced PACE with many more expected to follow in California and across the country.
California Feed-in Tariff (FIT)
California's Feed-in Tariff allows solar homeowners to enter into 10-, 15- and 20-year contracts with their utilities to sell solar electricity back to their provider. Solar thermal electric and solar PV are both eligible under the law. Prices paid are based on the California Public Utility Commission's market referent price and adjusted by time of use. Special higher rates are reserved for solar electricity between the hours of 8 a.m. to 6 p.m., with even higher rates available on summer weekdays. Maximum system size was adjusted in October of 2009 to 3 megawatts.
20-year contracts enjoy slightly higher rates, which also increase slightly from year to year through 2020. The tariff in general is not as lucrative as those made famous by countries like Germany and Spain, averaging between 9 and 12 cents per kilowatt-hour. However, solar rates for summer weekdays range between 15 and 22 cents per kWh, depending on electricity provider. For more information on rates, see CPUC Energy Division Resolution E-4137.
Other Solar Opportunities in California
Above are the general highlights for solar rebates and incentives in California. The state is so progressive in terms of renewable energy that incentives have formed a sort of ladder, reaching from the state government down through every municipality and utility. Some other highlights worth checking out are a solar water heater leasing program offered by Santa Clara Sewer & Water, and Sacramento Municipal Utility District's (SMUD) Residential Loan Program for PV and solar water heaters.
See the Database of State Incentives for Renewables and Efficiency (DSIRE) for detailed information on all state, municipal and utility rebates available to Californians.
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