California Solar Initiative Adds Performance Based Incentive in 2007

Date: 30 Aug 2006 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

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:


Avatar photo
Follow John Farrell:
John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.