Landmark Vote Would Establish Nation’s Largest Solar
Incentive Program Totaling $3.2 Billion Over 11
Years
SAN FRANCISCO—Thursday, January 12, the California Public Utilities
Commission (PUC) is expected to vote on the proposed California Solar Initiative
(CSI), committing a total of $3.2 billion in incentive funds designed to drive
consumers toward solar power over the next 11 years. The California Solar
Initiative (CSI), modeled largely on the Million Solar Roofs bill, is designed
to provide rebates for homeowners, businesses, farmers and government projects
that invest in a rooftop solar system.
The
proposal, if approved, will add $2.5 billion to $300 million approved in
December for 2006 rebates as well as to the estimated $400 million in existing
funds available through the preexisting Public Goods Fund. The combined $3.2 billion program is the
largest investment in solar power in the country. By driving demand through
incentives, the program promises to lower prices and put California on pace to
become a world leader in solar power.
“It is close to being official,” remarked Bernadette Del
Chiaro, clean energy advocate for Environment California, a nonprofit,
nonpartisan environmental advocacy group that has been pushing for a large-scale
solar incentive program for several years. “Finally, we are making California a
world leader in solar power.”
The California Solar Initiative would invest $3.2 billion
over 11 years in the form of consumer rebates with the goal of building 3,000 MW
of solar energy on a million homes, businesses, farms, schools and municipal
buildings by 2017. By increasing the
market 30-fold, economic models predict the price of solar would drop by 50 percent to
the point where subsidies could be phased out and power would be
cost-competitive with conventional energy such as natural gas.
“As huge energy bills hit California mailboxes this
month, there is no better time to jump start an affordable solar power market,”
said Del Chiaro. “Thursday’s vote could eclipse expensive and dirty fossil fuels
with clean and homegrown solar power.”
The California Solar Initiative would provide an upfront
rebate to consumers at a rate of $2.80 per installed watt in 2006. The rebate
would then decline annually by approximately 10 percent per year, in line with the
expected reduction in the cost of solar power. The rebate program would sunset
at the end of 2016, at which point it is predicted that the cost of solar power
would be cost-effective for consumers without a direct rebate.
For the typical California home installing a 2.5 kilowatt
system, the rebate in 2006 would be $7,000 bringing the cost of an average
$20,000 solar system down to $13,000. In addition, in 2006, homeowners will be
able to take advantage of a federal tax credit worth an additional $2,000. When
combined with low interest loans and lowered electric bills, California
homeowners could expect a return on their solar investment within the first
month.
The PUC anticipates it will fund the $3.2 billion program
without raising electricity rates. Instead, the money would come from existing
funds already earmarked for solar power as well as a small surcharge that the
PUC says can be absorbed into existing rates. According to a staff report
prepared by the PUC last summer, this $3.2 billion investment in solar could
save California ratepayers an estimated $10 billion due to a reduced need to
build two dozen peaking power plants or to purchase expensive electricity during
peak summer hours.
Other benefits of investing in solar power include
cleaner air and more jobs. For every solar roof, at least one ton of global
warming pollution is reduced. In addition, for every megawatt of solar power
installed, up to seven jobs are created, a seven-fold increase over the number of
jobs created from building the equivalent capacity in natural gas power plants.
The PUC program comes at the request of Gov.
Schwarzenegger and mirrors the bulk of the governor-backed Million Solar Roofs
bill (SB 1), authored by Senator Kevin Murray (D-Los Angeles), and broadly
supported by the state Legislature. The other policy elements contained in SB 1,
such as net metering and making solar panels a standard option on new homes,
still require legislative approval in 2006.
Major Elements of the
California Solar Initiative
• The complete California
Solar Initiative program would invest a total of $3.2 billion over 11 years for
consumer rebates. This number includes the $300 million added on December 15,
2005 as well as $400 million to be collected via the existing Public Goods
Charge.
• All small-scale solar technologies would be eligible:
e.g. photovoltaics, thermal, hot water, etc.
• Rebate would start at $2.80/watt, decline 10 percent per year
and be phased out at the end of 2016.
• Low-income ratepayers up to 260 percent of federal poverty
levels would not pay into the fund and 10 percent of the fund would be set aside for
low-income and affordable housing projects.
• The program would be
administered by the PUC with administration of a rebate program specifically
earmarked for new construction run by the California Energy Commission.
