California Public Utilities Commission. California Solar Initiative Annual Program Assessment June 2013

Transcription

1 California Public Utilities Commission California Solar Initiative Annual Program Assessment June 2013

2 California Solar Initiative Annual Program Assessment June 2013 Prepared by the California Public Utilities Commission Authors Tim Drew James Loewen Neal Reardon Ehren Seybert Melicia Charles, Supervisor Special Thanks June

3 Table of Contents Table of Contents Executive Summary Introduction Key Report Contents Introduction Background on California Solar Initiative (CSI) CSI Program Components CSI Program Regulatory Process Solar Installed Through Investor-Owned Utility Territory Solar Installations Net Energy Metering Data California Statewide Solar Installations CSI Program Components General Market Solar Program Single-Family Affordable Solar Homes (SASH) Program Multifamily Affordable Solar Housing (MASH) Program Virtual Net Metering (VNM) CSI-Thermal Program Research, Development, Demonstration, & Deployment Program Reporting and Evaluation Program Reporting Program Evaluation Plan CSI Program Budget California Solar Initiative Program Links and Contact Information CSI and CSI-Thermal Program Administrator Contacts June

4 Index of Tables Table 1: CSI Budget by Program Component Table 2: Solar Interconnections and Solar NEM Customers by Utility Table 3: California Statewide Solar Installations Table 4: CSI MW Targets by Utility and Customer Class Table 5: CSI EPBB Rebate Levels per Incentive Step Table 6: Current Statewide Solar Incentive Step Levels Table 7: All CSI Projects Pending and Installed Table 8: CSI Progress Toward Program Goal of 1,750 MW Table 9: CSI Applications received by year (MW) Table 10: CSI Program Activity, first quarter of Table 11: SASH Budget Allocations by IOU Service Territory Table 12: SASH Budget Allocations by Functions Table 13: SASH Incentive Rates in $/Watt Table 14: MASH Incentive Tracks, Revised as of D Table 15: MASH Budget Allocations by Utility Territory Table 16: MASH Budget Allocations by Function Table 17: MASH Program Progress Table 18: CSI-Thermal Gas-Displacing Budget Allocation Table 19: CSI Thermal Gas Displacing Program Budget Table 20: CSI-Thermal Low income Program Budget Allocation Table 21: CSI Thermal Electric Displacing Program Budget Table 22: CSI-Thermal Incentive Step Table Table 23: CSI-Thermal Low Income Incentive Step Table Table 24: Electric-Displacing Solar Thermal Incentives Table 25: CSI-Thermal Applications by Sector and Displaced Fuel Table 26: CSI-Thermal Program Applications by PA Table 27: CSI RD&D Program Budget Allocations Table 28: RD&D Grant/Incentive Allocations Table 29: CSI Program Budget Allocations (millions $) June

5 Index of Figures Figure 1: Customer-Sited Solar Capacity Installed in CA s IOU Territories, Figure 2: Customer-Sited Solar Projects Installed in CA's IOU Territories, June

6 1. Executive Summary 1.1. Introduction In January 2007, California began a $3.3 billion ratepayer-funded effort to install 3,000 megawatts (MW) of new solar over the next decade and transform the market for solar energy by reducing the cost of solar generating equipment. The California Public Utilities Commission s (CPUC) portion of the solar effort is known as the California Solar Initiative (CSI) Program. The CSI program goal is to install 1,940 MW of solar capacity by the end of 2016, and, along with other statewide solar programs, transition the solar industry to a point where it can be self-sustaining without subsidies. This Annual Program Assessment meets statutory requirement for an annual report to the Legislature on the progress of the CSI Program. 1 Other state authorized programs, including the New Solar Homes Partnership (NSHP) and publicly-owned utilities solar offerings, are not included in this report. 2 The market for solar generating equipment in California has grown at a rapid pace since the beginning of the CSI Program. The annual rate of new solar installations and the cumulative installed capacity both provide evidence that California is well along the path of achieving the installed capacity goals set forth by Senate Bill (SB) 1 in 2006, the legislation that authorized the CSI Program Key Report Contents This report contains current information on distributed solar energy systems in California, including systems installed through the CSI Program and those installed through other incentive programs. In addition, this report provides detailed information on CSI Program participation, installed capacity, equipment costs, and program impacts. The report also includes information on the progress of other CSI Program components, including the Single-Family Affordable Solar Homes Program (SASH); the Multifamily Affordable Solar Housing Program (MASH); the CSI-Thermal Program; the CSI-Thermal Low Income Program; and the Research, Development and Demonstration (RD&D) Program. This report also includes information on Net Energy Metering (NEM) and other relevant policy updates. 1 Public Utilities (PU) Code 2851 (c)(3) states, On or before June 30, 2009, and by June 30 th of every year thereafter, the commission shall submit to the Legislature an assessment of the success of the California Solar Initiative program. The CPUC submitted the first CSI Annual Program Assessment on June 30, 2009, available at: 2 Information on non-cpuc jurisdictional solar programs is available at June

7 1.2.1 Statewide Installed Solar Highlights Through the end of the first quarter of 2013, California has an estimated 1,629 MW 3 of installed solar capacity on the customer side of the meter at 167,878 customer sites in the investor-owned utility (IOU) territories. A record 391 megawatts (MW) were installed statewide in 2012, a growth of 26 percent from CSI General Market Program Highlights The CSI Program as a whole has installed 66 percent of its total program goal, with another 19 percent of the goal reserved in pending projects. PG&E and SDG&E territories have reserved and installed enough MW capacity to reach their goals in the residential sector. PG&E has achieved the most installations in the non-residential sector, having met 70% of their non-residential installation goal. The lowest installation rates for the residential sector are in SCE territory, where only 62% of the sector s goals are complete. NEM tariffs and the Federal Income Tax Credit (ITC) are playing a larger role in the economics of individual systems as the CSI program begins to phase out Other Program Highlights Single-Family Affordable Solar Homes (SASH) o Since the program was launched in December of 2008, SASH has received a total of 3,386 applications which have resulted in 8.5 MW of installed capacity on eligible homes, with another 1.8 MW currently in progress. o SASH applicants have received a total of $64 million in support for their residential solar systems. 3 The installed capacity data cited in this report does not include solar capacity installed on the system side of the meter through the Renewables Portfolio Standard (RPS). The most recent RPS quarterly report can be found at June

8 Multifamily Affordable Solar Housing (MASH) o As of March 31, 2013, MASH had 287 completed projects representing a total capacity of 18.4 MW. There are an additional 83 MASH projects in process, for a total capacity of 11.3 MW. o Virtual Net Metering 4 has allowed thousands of tenants to receive the direct benefits of solar as reductions in their monthly electric bills. CSI-Thermal Program o In just over three years of operation, the program has received 1,215 applications for $56.3 million in incentives. Research, Development, Demonstration and Deployment (RD&D) Program o The CSI RD&D Program has conducted three project solicitations since its inception, resulting in grant funding for 23 projects totaling $28 million. The funded projects focused on the following areas: Integration of solar PV into the electricity grid. Energy generation technologies and business development. Grid integration and production technologies. o A fourth solicitation of $7 million is currently anticipated for the second quarter of The focus of the fourth solicitation will be cost-effective, safe, and reliable strategies for integrating PV into distribution systems Net Energy Metering All but 92 MW, or 6 percent, of solar capacity in the state is signed up for Net Energy Metering (NEM) tariffs. Pursuant to Assembly Bill (AB) 2514 (Bradford, 2012) and Decision (D.) , the Commission has initiated a study on the costs and benefits of NEM to ratepayers. The study will be released later this year. 4 Virtual Net Metering was first approved by the Commission when the MASH Program was adopted in D VNM is a tariff which allows the bill credits from a single solar system to be shared among multiple customer accounts. June

9 2. Introduction 2.1. Background on California Solar Initiative (CSI) The California Solar Initiative (CSI or CSI Program) is the solar rebate program for California investor-owned utilities: Pacific Gas and Electric (PG&E), Southern California Edison (SCE), San Diego Gas & Electric (SDG&E). The goals of the CSI Program are to: Install 1,940 MW of distributed solar energy system generation capacity or the equivalent in the large electric IOU service territories and displace 585 million therms of natural gas usage, or the equivalent output of 200,000 solar thermal systems; Transform the market for solar energy systems so that it is price competitive and self-sustaining. Incentives under the CSI Program are available to solar PV systems as well as solar thermal technologies. Existing residential homes, as well as all commercial, industrial, government, non-profit, and agricultural properties within the service territories of the large electric and gas IOUs are eligible for CSI Program participation. 5 The CSI Program focuses exclusively on solar energy systems used by IOU customers who want to offset some or all of their own energy consumption. In the case of the solar PV program, the solar energy systems funded under the program reduce the customer's electricity consumption from the grid. In the case of the solar thermal program, the solar energy systems reduce the customer's gas or electricity consumption, depending on the customer's energy source for their existing hot water system. The CSI Program does not fund wholesale solar power plants, which are designed to serve the electric grid; nor does it contribute toward the utilities Renewable Portfolio Standard (RPS) obligations. 6 5 The electric-displacing portion of CSI Program, which covers solar PV and some solar thermal systems, was authorized by the California Public Utilities Commission (CPUC) in a series of regulatory decisions between 2006 and In addition, the Legislature expressly authorized the CPUC to create the CSI Program in 2006 in Senate Bill (SB) 1 (Murray, 2006). The gas-displacing solar thermal portion of the CSI was authorized by the Legislature in Assembly Bill (AB) 1470 (Huffman, 2007) and implemented by the CPUC in early 2010 after the required evaluation of a pilot program in the San Diego area. 6 The California utilities contract for a variety of renewable resources, including large and small solar power plants as part of the RPS Program. Updates on the progress of the RPS program can be found at June

10 2.2. CSI Program Components The overall CSI Program has two funding streams, depending on whether the rebated technology displaces natural gas or electricity. The electric portion of the CSI Program has a 10-year budget of $2.2 billion collected from electric ratepayers as authorized by SB 1 (Murray, 2006). AB 1470 (Huffman, 2007) authorized $250 million in additional spending on thermal technologies through 2017 to be collected from gas ratepayers, which will be used to fund gas-displacing technologies, such as solar water heaters, in the CSI- Thermal program. The CSI Program has several program components, as shown in Table 1, each with its own Program Administrator and budgets overseen by the California Public Utilities Commission (CPUC or Commission): The CSI General Market Solar Program provides incentives for residential and non-residential systems between one-kilowatt to one-megawatt. The general market Program Administrators (PAs) are PG&E, SCE, and the California Center for Sustainable Energy (CCSE) in SDG&E territory. The goal of the general market rebate program is to incentivize 1,750 MW of demand-side solar capacity using a tenyear budget of $1.9 billion for both incentives and program administration. The general market solar program funds solar PV and solar thermal technologies. The CSI Single-Family Affordable Solar Homes (SASH) Program provides solar incentives to qualifying single-family, low income housing owners. The SASH Program is administered through a statewide Program Manager, GRID Alternatives, with a budget of $108 million. The SASH program offers job training to hundreds of volunteers and workforce development participants, and offers competitive opportunities for solar installers through a subcontractor program. The CSI Multifamily Affordable Solar Housing (MASH) Program provides solar incentives to multifamily low income housing facilities. The MASH Program also has a $108 million budget and is administered through the same Program Administrators as the general market solar program: PG&E, SCE, and CCSE. The popularity of this fully subscribed program has resulted in the recent expansion of the Virtual Net Metering (VNM) tariffs, which allow a system owner to share bill credits for solar production with the building s tenants. The CSI Research, Development, Demonstration and Deployment (RD&D) Program provides grants to develop and deploy solar technologies that can advance the overall goals of the CSI Program, including achieving targets for capacity, cost, and a self-sustaining solar industry in California. The RD&D Program is administered through the RD&D Program Manager, Itron, Inc., and has a budget of $50 million. June

11 The CSI-Thermal Program provides solar thermal incentives to eligible systems such as gas or electric displacing solar water heaters. The CSI-Thermal program is funded separately depending on whether the project is electric-displacing or gasdisplacing. There are five Program Administrators for the CSI Thermal Program. PG&E, SCE and CCSE administer the electric-displacing portion of the Program in their respective territories, and PG&E, Southern California Gas Company (SCG) and SDG&E administer the Program for the gas-displacing portion. In mid-april 2012, the CSI-Thermal program launched a $5 million, 2-year public relations contract to spotlight the benefits of solar thermal technologies to targeted end users. The CSI- Program now consists of two subcomponents: residential program, low income program and commercial/multifamily program. Table 1: CSI Budget by Program Component Program Component Budget ($ Millions) Goal General Market Solar Program (includes PV and electric displacing solar thermal technologies) $1,897 1,750 MW Single family Affordable Solar Homes (SASH) $ MW (see note) Multifamily Affordable Solar Housing (MASH) $ MW (see note) Research, Development, Demonstration, and Deployment (RD&D) $50 N/A Solar Water Heating Pilot Program (SWHPP) $ SWH systems Sub Total: CSI Electric Budget (Electric Displacing) $2,167 1,940 MW CSI Thermal Program (Gas Displacing) $ million therms 7 Total CSI Budget $2,417 Source: CPUC D , p. 28 established goal of the general market program as 1,750 MW. In addition, D established the CSI Thermal Program pursuant to AB 1470 (Huffman, 2008) and SB 1 (Murray, 2006). Note: The CPUC decisions on MASH and SASH did not explicitly adopt a 95 MW per program goal; however, the CPUC did adopt a total CSI program goal of 1,940 MW in D The Legislature, via AB 217, is currently considering revising the MW goals for the MASH and SASH Programs CSI Program Regulatory Process Between 2006 and 2013, the Commission adopted a number of regulatory decisions establishing the CSI Program, as well as various CSI Program components. 8 Rules and 7 The CSI-Thermal goal of 585 million therms is the equivalent of 200,000 SWH residential systems. June

12 procedures pertaining to Distributed Generation, including the CSI Program, are currently developed within Rulemaking (R.) In addition to formal regulatory decisions, the CPUC and CSI Program Administrators have made numerous CSI Program changes based on regular informal feedback from program stakeholders and in response to issues that arise during program implementation. To gather feedback on the program, the CSI Program Administrators host quarterly public CSI program forums to discuss potential program changes with stakeholders. 9 The Program Administrators periodically file program rule changes via advice letters, consistent with the CPUC-established CSI Program Handbook process. These are processed by Energy Division staff in accordance with General Order (G.O.) 96-B. 10 As a result, the CPUC has revised and reissued the CSI Program Handbook numerous times per year since the program first began CSI Program Decisions--General Market Key decisions related to the CSI Program include (but are not limited to): D adopted the CSI Program. D adopted Performance Based Incentives, an administrative structure, and other program start-up elements. D modified earlier decisions to conform to SB 1. D modified the incentive adjustment mechanism to account for program dropouts. D established interim marketing and outreach objectives for the program. D and D modified metering and performance monitoring requirements for the program. On July 29, 2008, the Assigned Commissioner issued a Ruling establishing a Program Evaluation Plan for the California Solar Initiative. D modifies the CSI general market budget, shifts $40 million from the program administration budget into the incentive budget as partial mitigation for higher than anticipated performance payments under the PBI mechanism. 8 The Commission has developed the CSI program in a series of Rulemakings (R) since 2006, including R and R , with precedents from even earlier proceedings like R Each of the decisions noted herein occurs in one of those dockets, unless otherwise noted. 9 Information on the CSI Program Forums can be found at 10 G.O. 96-B June

13 D modifies prior CSI decisions, including D and , based on a comprehensive staff proposal. D modifies the CSI budget requirement, as adopted in D , D and D , in response to SB 585 (Kehoe, 2011) Other CSI Program Component Decisions D established the Solar Water Heating Pilot Program in SDG&E territory. D established the CSI RD&D program. D established the CSI SASH program. D established the CSI MASH program. D established the CSI-Thermal Program to provide solar water heating incentives statewide. D establishes the Low Income Solar Water Heating Component of the CSI-Thermal program. D establishes the eligibility of propane-displacing technologies for the CSI-Thermal Program. D establishes a performance-based incentive structure for the CSI-Thermal Program and expands program eligibility to process heat, solar cooling and combination systems. June

14 3. Solar Installed Through 2012 This section of the report summarizes data on the cumulative installed capacity 11 and number of solar projects installed in California investor-owned utility territories and provides a table showing all distributed solar installed statewide Investor-Owned Utility Territory Solar Installations Through the end of 2012, the state installed 1,427 MW of solar capacity at 142,211 sites in the investor-owned utility (IOU) territories. This data includes solar projects interconnected under any of the IOU solar programs, including CSI, NSHP, Emerging Renewables Program (ERP), and the Self-Generation Incentive Program (SGIP). IOU data does not include solar projects installed in Publicly-Owned Utility (POU) areas, such as Los Angeles Department of Water and Power or Sacramento Municipal Utility District, nor data from multi-jurisdictional utilities, such as the Pacific Power California Solar incentive Program. 12 CSI Program-only data is featured in Section 4. Figure 1 shows the amount of solar capacity installed by year in IOU territories, with 391 MW installed in 2012, a growth of 26 percent from This figure relies on interconnection data submitted to the CPUC by the utilities (rather than data specific to the CSI Program featured elsewhere in this report), and it does not distinguish which solar program provided funding for the solar project. Figure 2 uses the same data as Figure 1, but shows the data as the number of installations. There were 38,436 solar projects installed in the IOU territories in 2012, a growth of 40 percent from All of the solar capacity identified in Figure 1 and Figure 2 is installed on customer sites, and does not include solar power plants installed on the wholesale side of the meter for use in compliance with the Renewables Portfolio Standard (RPS). 11 All data in this assessment are for grid-tied solar PV (i.e. interconnected to the utility grid), unless otherwise noted. All solar in this report is customer-side of the meter self-generation designed to serve onsite load. All references to capacity are reported in CEC-AC units, which is the industry standard for net electricity output in megawatts (MW) based on the California Energy Commission s Alternating Current rating of solar panels. The CEC-AC rating tends to be slightly less than the nameplate capacity. 12 In compliance with its program application, A , Pacific Power will submit its first annual report to the Commission by July 31, The PPCSIP program is authorized to provide incentives for 4 MW of solar energy in the next five years. June

15 CPUC California Solar Initiative Annual Program Assessment Figure 1: Customer Sited Solar Capacity Installed in CA s IOU Territories, Cumulative ,037 1,427 MW Installed Data is through December 31, It Includes CSI, NSHP, ERP and SGIP data, but not POU or RPS data. Figure 2: Customer Sited Solar Projects Installedd in CA's IOU Territories, ,265 3,225 6,302 11,051 15,463 21,929 31,218 40,859 56,697 76, , ,211 Cumulative Projects Data is through December 31, It Includes CSI, NSHP, ERP and SGIP data, but not POU or RPS data. June

16 3.2. Net Energy Metering Data The majority of solar customers are enrolled in NEM tariffs, pursuant to Public Utilities Code The NEM Program supports onsite solar installations up to 1MW in capacity designed to offset a portion or all of the customer s electrical load, and does not include wholesale generation projects designed to sell electricity to the utility grid. 13 CSI Program participants are eligible for utility interconnection and NEM tariffs that facilitate solar by allowing solar customers to feed limited amounts of excess electricity into the grid. Under NEM, customers receive a bill credit (in dollars) based on the full retail rate - including generation, transmission, and distribution rate components for any excess generation (in kwh) that is exported back to the grid. In periods when a customer s bill is negative (because the value of the energy produced by the DG facility exceeds the value of the energy consumed on site), the negative balance is carried forward up to one year, at which point customers may elect to receive net surplus compensation for any electricity produced in excess of on-site load, or apply the net surplus compensation credit towards future consumption. Some solar projects, especially those with a solar system that is small relative to total load, opt to take utility service under a non-nem tariff. Table 2 shows the total solar interconnections compared to the customers on solar NEM tariffs. Only 92 MW, or 6 percent, of solar capacity in the state is not signed up for NEM tariffs. Table 2: Solar Interconnections and Solar NEM Customers by Utility MWs Interconnected Customers Interconnected MWs on NEM tariffs Customers on NEM Tariffs PG&E 780 MW 77, MW 77,508 SCE 341 MW 43, MW 43,347 SDG&E 123 MW 21, MW 20,992 Total 1,427 MW 142,211 1,335 MW 141,847 Data is from December It Includes CSI, NSHP, ERP and SGIP data, but not POU or RPS data. 13 The Renewable Portfolio Standard (RPS) Program supports large scale solar power plants through the procurement of such plants to serve wholesale electrical demand. Information on solar procured by large IOUs to meet RPS requirements can be found at: June

17 3.3. California Statewide Solar Installations Through the end of the first quarter of 2013, California has an estimated 1,629 MW 14 of installed solar capacity at 167,878 customer sites. As detailed in Table 3, this statewide solar data combines the best available information on (1) IOU interconnections thru 2012; (2) IOU installed solar in 2013 based on CSI Program Data; and (3) POU solar data thru The CPUC tracks IOU interconnection data on a quarterly basis and CSI program data is available weekly. Data on POU solar projects is collected by the CEC, and, to date, the information is only available annually. The snapshot shown in Table 3 provides the best available estimate of California statewide solar installations. Table 3: California Statewide Solar Installations Data Source and Dates Total MWs Total Projects Solar Installations in California IOU Territories All IOU Interconnections, , ,211 CSI Program Data Only, 1/1/2013 through 4/1/ ,260 Solar Installations in California POU Territories CEC through ,407 Total California Solar Installations 1, , The installed capacity data cited in this report does not include solar capacity installed on the system side of the meter through the Renewables Portfolio Standard (RPS). The most recent RPS quarterly report can be found at June

18 4. CSI Program Components As of March 31, 2013, the CSI Program passed the notable milestone of 1,000 MW of cumulative capacity installations, for a total of 1,148 MW of installed capacity since program inception. This milestone was passed through installations in the general market, SASH and MASH programs, discussed in more detail below General Market Solar Program Program Background The CSI general market solar program is the largest CSI Program component. It offers incentives to all eligible customers in large IOU territories who install PV solar systems. These incentives are based on either the actual or calculated performance of a solar system, such that higher performing systems receive a larger incentive than lower performing systems. This heavy emphasis on performance in the CSI Program is designed to optimize California ratepayer investment in solar. In addition, the CSI Program requires program participants to complete energy efficiency audits to encourage applicants to invest in costeffective energy efficiency measures prior to sizing their solar system, consistent with the state's Energy Action Plan and "loading order." Incentive Types The CSI Program pays solar consumers an incentive based on system performance. The incentives are either an upfront lump-sum payment based on expected performance, or a monthly payment based on actual performance over five years. The Expected Performance-Based Buydown (EPBB) is the upfront incentive available only for smaller systems. The EPBB incentive is a capacity-based incentive that is adjusted based on expected system performance calculated using an EPBB calculator 16 that considers major design characteristics of the system, such as panel type, installation tilt, shading, orientation, and solar insolation available by location. 15 The loading order was introduced in the Energy Action Plan (EAP), which was adopted in 2003, which is a joint effort by the CPUC, the California Energy Commission and the California Power Authority. The EAP adopted a loading order of preferred energy resources - the first of which is energy efficiency. 16 The EPBB calculator is publicly available at The EPBB calculator estimates the expected performance of a solar system based various factors including the tilt, azimuth, location, PV module type and mounting type of a specific system. June

19 The Performance Based Incentive (PBI) is paid based on actual measured performance over the course of five years. The PBI is paid on a fixed dollar per kilowatt-hour ($/kwh) of generation basis and is the required incentive type for larger systems, although smaller systems may opt to be paid based on PBI. As of January 2010, all systems 30kW and greater are required to take the PBI incentive Incentive Level Design The CSI Program offers financial incentives that decline in steps as more capacity is installed. The declining incentives, required by PU Code 2851, are intended to help the program meet the goal of creating a self-sustaining solar industry by forcing rebates down as the solar industry grows. Each step has an installed MW target that triggers the subsequent step down in incentives. The capacity targets per incentive step are further broken down into allocations across customer type and across the three IOU service territories. Table 4 presents the capacity target by utility territory and customer class, showing how all of the incentives were originally allocated over the expected 10-step life of the program. Actual allocations by step will vary due to dropouts and other factors. June

20 Table 4: CSI MW Targets by Utility and Customer Class PG&E (MW) SCE (MW) SDG&E (MW) Step MW in Step Res Non Res Res Non Res Res Non Res Subtotals (Res and Non Res) Totals Percent 43.7% 46.0% 10.3% Source: D , Appendix B, Table 11. Notes: The MWs for Incentive Step 1 were reserved under the Self Generation Incentive Program in Non Residential (Non Res) includes commercial, government, and non profit facilities. Table 5: CSI EPBB Rebate Levels per Incentive Step Incentive in Step (EPBB, $/Watt) Step Residential Commercial Government Nonprofit 1 n/a n/a n/a 2 $2.50 $2.50 $ $2.20 $2.20 $ $1.90 $1.90 $ $1.55 $1.55 $ $1.10 $1.10 $ $0.65 $0.65 $ $0.35 $0.35 $ $0.25 $0.25 $ $0.20 $0.20 $0.70 Source: trigger.com/ For comparison, the average installed cost for PV systems below 10 kw is $6.16 per watt, as of June 25, 2013 (see for current average system costs). June

21 Current Incentive Steps Table 6 shows the current steps for each service territory for all customer classes and incentive types. Once the incentives reserved for each customer class within a utility territory reach the capacity target for a given step, the incentive level offered drops to the next lower step. These drops occur independently of one another for example, reservations made in PG&E s residential step do not affect the level of incentives offered to PG&E s nonresidential customers, nor do they affect other territories. This creates a demand-driven program that adjusts solar incentive levels based on local solar market conditions. It is important to note that the EPBB rebates in step 10 for residential and commercial are less than 5% of the average system installed cost. Program Administrator Table 6: Current Statewide Solar Incentive Step Levels Customer Class Current Step EPBB Incentive Value ($/Watt) PBI Incentive Value ($/kwh) MW Remaining in Step MW Under Review Residential 10 $0.20 $0.025 N/A 2.89 CCSE Commercial $0.35 $0.044 (San Diego) Government/ $1.10 $0.139 Tax exempt Residential 10 $0.20 $0.25 N/A 2.48 Commercial $0.20 $0.025 PG&E Government/ 10 $0.70 $0.088 Tax exempt Residential 9 $0.25 $ Commercial $0.25 $0.032 SCE Government/ 9 $0.90 $0.114 Tax exempt Data as of 3/31/2013. Note: * Per Senate Bill 585, PBI payments have been revised to reflect a 4% discount rate which creates new PBI rates for Steps 8, 9, & 10. For comparison, the average installed cost for PV systems below 10 kw is $6.16 per watt, as of June 25, 2013 (see for current average system costs). June

22 4.1.2 Program Progress The charts and tables in this section illustrate the CSI general market solar program progress to date, with data from the California Solar Statistics (CSS) web page. 17 In addition, the CSI Program releases a Data Annex each quarter with key program application processing metrics, such as application processing times. 18 The CSS website and the Data Annex are discussed further in Section 5.1. There are many ways to measure the progress of the CSI general market program, including progress towards the two stated goals of the Program: 1) Install 1,750 MW of solar PV capacity; and 2) transform the market for solar so that it is price competitive and sustainable. This section reports on the installations, pending and complete, the solar price trends, program participation rates, and program budgets. The CSI Measurement and Evaluation (M&E) program component performs more detailed analysis, including cost benefit analyses, impact analyses, and other studies intended to help understand and improve the Program s performance. 19 The progress of the M&E component is reported in Section General Market Program Trends Several trends have emerged since the CSI Program s inception in 2007, suggesting that the program is approaching its goal of stimulating widespread adoption of solar and creating a self-sustaining market, free of direct cost-support in the form of program rebates Average System Costs for Program Participants Since 2007, the average cost of residential systems has decreased 32 percent from $8.77 per Watt to $5.98 per Watt in the first quarter of 2013 (CEC-AC, with figures adjusted for inflation). Non-residential systems have decreased 33 percent from an average of $8.23 per Watt in 2007 to $5.55 in the first quarter of These significant cost declines point to the success of the CSI in contributing towards a sustainable solar industry in California. It is worth noting, however, that even great PV system cost declines have been witnessed in Germany, where the cumulative residential MW installed capacity dwarfs that of California. 21 Since July 2010, the CSI program has imposed a soft cap on per watt system costs to encourage an ongoing reduction in system costs. If an application comes in above the cap, 17 California Solar Statistics can be accessed here: 18 The CSI Program releases a Data Annex each quarter. 19 All CSI Program Measurement and Evaluation reports are available at: 20 The solar industry may continue to require the support of Federal Tax Credits and Net Energy Metering for a longer term before achieving self-sustainability June

23 the applicant must submit an explanation for the high cost; the host customer must acknowledge that the project is higher than the cap; and the PA must find the explanation reasonable. As directed by SB 585, the CPUC revised the methodology to calculate the system cost cap to be based on national and state installed cost data. Originally set at two standard deviations above the program s average cost per watt, the cost cap was lowered by Resolution E to $1.00 per watt above the 12-month rolling average of CSI system costs. In addition, the Commission set separate cost caps for residential and nonresidential projects by calculating this average cost for systems under 10kW (largely residential projects) and for those over 10kW (largely nonresidential projects). These average cost figures are recalculated and published on on a weekly basis. National solar installation cost data are reviewed annually by the Energy Division to keep CSI system costs in line with national trends General Market Program Activity The general market CSI Program is making significant progress towards meeting the program s goal of 1,750 MW installed by Table 7 shows the program s current activity. In 2012, the CSI passed the thousand MW mark of total installed capacity. Table 7: All CSI Projects Pending and Installed Installed Projects Applications 102,507 Capacity (MW) 1,148 Incentive $ million $1,775 Pending Projects Applications 18,196 Capacity (MW) 329 Incentive $ million $12 Total CSI Activity Applications 120,703 Capacity (MW) 1,477 Incentive $ million $1,617 Source: data through March 31, June

24 Progress Toward Goals The CSI Program has installed 66 percent of its total program goal, with another 19 percent of the goal reserved in pending projects. The utilities are progressing towards their individual goals at varying rates, depending on the utility and customer sector. The residential sector in SDG&E territory is complete, with PG&E s not far from finishing as well. The lowest installation rates for the residential sector are in SCE territory, where only 62% of the sector s goals are complete. PG&E has the most installations in the nonresidential sector, having reached 70% of their installation goal. Table 8: CSI Progress Toward Program Goal of 1,750 MW Customer Class Installed Pending Remaining Goal SCE Non Residential (MW) Non Residential (% of Goal) 46% 16% 38% Residential (MW) Residential (% of Goal) 65% 18% 48% PG&E Non Residential (MW) Non Residential (% of Goal) 70% 25% 5% Residential (MW) Residential (% of Goal) 97% 16% 0% SDG&E (CCSE) Non Residential (MW) Non Residential (% of Goal) 48% 17% 35% Residential (MW) Residential (% of Goal) 108% 10% 0% Total (MW) 1, ,750 Total (% of Goal) 66% 19% 16% Source: data through March 31, CSI Program Activity CSI Program activity continued to grow in 2013 despite the declining incentive levels per Watt of installed capacity. This suggests that the CSI program design of declining incentives levels as the market matures has been successful. In the final steps of the CSI, NEM and the Federal Income Tax Credit (ITC) provide a much greater level of financial support than the CSI incentives. June

25 Table 9: CSI Applications received by year (MW) Year Residential Non-Residential Total Source: data through December 31, Table 10: CSI Program Activity, first quarter of 2013 New Applications Received Capacity (MW) 47 Number of Projects 4,734 Source: data through March 31, Impacts of Tax Credits and Net Energy Metering The Federal Investment Tax Credit (ITC), which was expanded in 2008 by the Energy Improvement and Extension Act and by the 2009 American Recovery and Reinvestment Act, provides a tax credit of up to 30% of the total installed cost of solar systems. Since 2008, California has received an estimated $2.7 billion of ITC support for solar projects. At 30% of total installed cost, the ITC is now a much more significant incentive than that provided by the CSI in most program areas. Similarly, in the 2010 cost-effectiveness study of the NEM program, 23 the CPUC found that NEM represents an ongoing incentive equivalent to approximately $0.88 per watt (on average, and on a net present value basis), in addition to any rebates received under the CSI program. The value of the ITC and NEM credits can be compared to the current CSI per watt rebates, which range from $0.35 to $0.20 for residential and commercial customers Marketing and Outreach Efforts The overall budget for CSI Marketing and Outreach (M&O) was established in D at $21,625,000, and the CPUC provides guidance for statewide M&O activities. Such activities include free monthly training for professionals and consumers on a wide range of solar-related topics at various level of technical expertise. The program administrators also 23 June

26 issue a monthly electronic newsletter, now distributed to more than 10,000 subscribers. Sponsorships and solar promotions provide opportunities for program representatives to interact with various solar audiences. The program features a main solar web site, and each PA maintains a website with information specific to their particular territory. Program administrators actively promote integration with other demand-side programs, particularly in the development of online customer decision making tools like online energy analyzers, as well as welcome kits that cover the range of energy services available to new utility customers Single-Family Affordable Solar Homes (SASH) Program Program Background The Single-Family Affordable Solar Homes Program (SASH), one of the two low income components of the CSI Program, provides incentives for solar PV systems for eligible low income homeowners. The CPUC approved the SASH Program in November 2007 in D as part of the CSI Program. GRID Alternatives (GRID) was selected as the statewide Program Manager for the SASH Program. 24 GRID is a non-profit providing renewable energy services, equipment, and training in low income communities throughout California since As Program Manager for the SASH Program, GRID identifies eligible low income households, markets the SASH program, and installs PV systems for eligible SASH participants. The SASH Program is designed to be a comprehensive low income solar program. In addition to providing incentives, SASH is structured to promote or provide energy efficiency services, workforce development and green jobs training opportunities, and broad community engagement with low income communities. To achieve this, the SASH Program provides consumer education on solar and energy efficiency technologies to the diverse volunteer base that contributes to SASH installations. On average, over 200 volunteers per month participate in these solar orientation programs. This outreach helps further the broader goals of promoting the use of PV-solar technology statewide and helping build broad-based community support for solar electric technologies and energy efficiency. In some cases, GRID Alternatives sub-contracts with qualified solar contractors to install SASH projects through the SASH Sub-Contractor Partnership Program (SPP). 24 D ordered the SASH Program to be administered by a single statewide program manager to ensure consistency and equity in program delivery statewide while working with a diverse group of stakeholders and service providers. (p. 45, Conclusion of Law 10). June

27 SASH Program Budget The SASH budget is $108.3 million, allocated according to the information in Table 11 and Table 12. Table 11: SASH Budget Allocations by IOU Service Territory Utility PG&E SCE SDG&E Total Percentage % Total Budget (millions) $47.3 $49.8 $11.2 $108.3 Source: D Table 12: SASH Budget Allocations by Functions Function Allocation Administration 10% Marketing and Outreach 4% Measurement and Evaluation 1% Incentives 85% Source: D Program Eligibility The SASH Program is open to customers of the large electric IOUs who qualify as singlefamily, low income households as defined in PU Code 2852 (described further below). PU Code 2852 allows owner-occupied residences that are part of a larger multifamily complex to qualify under certain conditions. GRID Alternatives has created a statewide database of eligible homes in collaboration with the California Housing Partnership Corporation (CHPC) which is instrumental in the effort to establish relationships and identify resources within targeted local jurisdictions Program Incentives The SASH incentives are higher than the CSI general market on a $/Watt basis, and vary depending on the household s income level and their eligibility for the California Alternate Rates for Energy (CARE) 25 program. The SASH incentive does not decline over time as in the general market CSI Program. 25 CARE provides a minimum of a 20% discount on the energy bills of qualifying low-income customers. June

28 Eligible participating households are provided a one-time payment under the CSI EPBB structure to help reduce the up-front cost of installation. The SASH Program has one fullysubsidized (i.e. covers the full installed cost of the system) and six highly-subsidized incentive payment levels based on the applicant s income compared to the area median income (AMI), tax liability, and eligibility for the CARE program. The incentive rates shown in Table 13 are intended to provide low income residents who have no federal tax liability with a positive cash flow in the first year of solar installation Incentive Structure The following incentive structure is available to customers whose total household income is below 80% of the area median income. The incentive is calculated on a sliding-scale that is based on the homeowner s tax liability and the customer s eligibility in the CARE program. If the Applicant qualifies for the CARE program but is not currently enrolled, the Program Manager will work with the Applicant to enroll them into CARE. Table 13 shows the sliding-scale incentive rates: Table 13: SASH Incentive Rates in $/Watt Federal Income Tax Liability Low income CARE Eligible Low income Residents Not Eligible for CARE $0 $7.00 $5.75 $1 $1000 $6.50 $5.25 $ $6.00 $4.75 Source: D For comparison, the average installed cost for PV systems below 10 kw is $6.16 per watt, as of June 25, 2013 (see for current average system costs) Program Progress The SASH Program has experienced heavy growth in program applications and made significant progress in key areas including: expanding the Sub-Contractor Partnership Program (SPP); increasing marketing and outreach efficiency; building partnerships with volunteers and job training/workforce programs; and broadening the affordable housing client database. GRID Alternatives currently has seven offices located in Oakland (PG&E), Carson (SCE), San Diego (SDG&E), Fresno (SCE/PG&E), Atascadero (SCE/PG&E), Riverside (SCE), and Chico (PG&E). June

29 SASH Program Data Since the program was launched in December of 2008, SASH has received a total of 3,386 applications which have resulted in 8.5 MW of installed capacity on eligible homes, with another 1.8 MW currently in progress. These applicants have received a total of $64 million in support for their residential solar systems. Nearly all of the completed SASH installations were made at no cost to the homeowners. GRID Alternatives accomplished this by leveraging funding from local jurisdictions, project sponsorships, and through general non-profit fundraising. Since the SASH incentive does not cover 100 percent of installation costs, identifying gap financing from third-party sources is critical to achieving the long-term goals of SASH since individual homeowners are unable to fund the additional incremental costs SASH Workforce Development Efforts Every SASH installation provides workforce development opportunities. In implementing the SASH Program, GRID Alternatives provides opportunities for job trainees and local volunteers to assist with installations, to engage their communities, and to participate in the California solar and energy efficiency programs. As a result of these training sessions, many participants have gone on to receive NABCEP (North American Board of Certified Energy Professionals) certifications, the gold standard for PV installation work. The SASH Program, as currently structured, will provide job training and volunteering opportunities totaling over 1 million hours of hands-on solar installation experience. GRID reserves at least twenty percent (20%) of all SASH installations for solar-installer job trainees, often targeting low income communities. This becomes a double benefit to low income communities, since GRID recruits job trainees from the same communities that the SASH Program aims to serve Sub-Contractor Partnership Program The SASH Sub-Contractor Partnership Program (SPP) provides opportunities for licensed California contractors to participate in SASH installations, not limited to GRID employees, volunteers and workforce program trainees. Qualified contracting companies agree to a reduced cost model and commit to hiring at least one eligible job trainee for each SASH installation. Though the SASH Program requires contractors to hire only one eligible job trainee per installation, some sub-contractors have exceeded this expectation by having more than one eligible trainee on their SASH installations. June