About the California Solar Initiative

The California Solar Initiative (CSI) is overseen by the California Public Utilities Commission (CPUC) and provides incentives for solar system installations to customers of the state’s three investor-owned utilities (IOUs): Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E). The CSI Program provides upfront incentives for solar systems installed on existing residential homes, as well as existing and new commercial, industrial, government, non-profit, and agricultural properties within the service territories of the IOUs.

The CSI Program expanded state support for solar technology and is the product of Governor Schwarzenegger’s “Million Solar Roofs” vision for the State of California. The CSI Program was authorized by the CPUC through a number of regulatory decisions throughout 2006. In addition, the legislature expressly authorized the CPUC to create the California Solar Initiative in 2006 in Senate Bill 1 (Murray). When it launched in January 2007, the CSI Program built upon nearly 10 years of state support for solar, including other incentive programs such as the Emerging Renewables Program (ERP) and the Self-Generation Incentive Program (SGIP). Both programs still exist to provide incentives for other technologies but have been closed to new solar projects as of the end of 2006.

CSI Program Components

The CSI Program has a budget of $2.167 billion over 10 years, and the goal is to reach 1,940 MW of installed solar capacity by the end of 2016. The goal includes 1,750 MW of capacity from the general market program, as well as 190 MW of capacity from the low income programs. The general market program is the main incentive program component of the CSI, and is administered through three Program Administrators: PG&E, SCE, and California Center for Sustainable Energy (CCSE) in SDG&E territory.

In addition to the general market program, the CSI Program has four other program components, each with their own program administrator and 10 year budgets:

• A research and development (RD&D) program, providing grants to solar technologies that can advance the overall goals of the CSI Program; the RD&D program is administered through the RD&D Program Manager, Itron, and has a budget of $50 million.
• The Single-family Solar Affordable Solar Housing (SASH) program, providing solar incentives to single family low income housing; the SASH program is administered through the SASH Program Manager, GRID Alternatives, and has a budget of $108 million.
• The Multifamily Affordable Solar Housing (MASH) program, providing solar incentives to multifamily low income housing; the MASH program is administered through the same Program Administrators as the general market program: PG&E, SCE, and CCSE, and it has a budget of $108 million.
• The CSI-Thermal Program, providing incentives for solar water heating and other solar thermal technologies to residential and commercial customers of PG&E, SCE, SoCal Gas, and SDG&E..

In addition to the CPUC’s CSI Program, Senate Bill 1 envisioned that the State of California would also have other programs to support onsite solar projects, including the California Energy Commission’s New Solar Homes Partnership (NSHP), and a variety of solar programs offered through publicly owned utilities (POU). The statewide effort includes the CSI – as well as the NSHP and the POU programs – and it is known collectively as Go Solar California. The statewide goal of the Go Solar California campaign is 3,000 MW and there is a statewide budget of $3.3 billion. The CSI Program is a subset of the wider solar effort in California.

Table 1. Go Solar California Campaign by Program Component, 2007-2016

Solar Incentive Level Design

The CSI Program is designed to be responsive to economies of scale in the California solar market – as the solar market grows, it is expected solar system costs will drop and incentives offered through the program decline. The CPUC divided the overall megawatt goal for the incentive program into 10 programmatic incentive level steps, and assigned a target amount of capacity in each step to receive an incentive based on dollars per-watt or cents per-kilowatt-hour. The MW targets in each incentive step level are assigned to particular customer classes (residential, commercial, and government / non-profit) and allocated across the three IOU service territories, in proportion with each group’s contribution to overall state electricity sales.

Once all the MW targets in a particular incentive step level are reserved via CSI application, which can occur at different times for each customer class in each utility service territory, the incentive level offered by the CSI Program automatically reduces to the next lower incentive step level. This creates a demand-driven incentive program that adjusts solar incentive levels based on local solar market conditions.

Figure 1 below shows how CSI incentives decline as the program progresses through the 10 steps and more MWs are installed. The CSI incentive levels have declined by customer class and utility, from January 2007 to the present. See the CSI Trigger Tracker for currently applicable step levels.

Figure 1. Overview of the CSI Step Level Changes

Incentive Types

The CSI Program pays solar consumers their incentive either all at once for smaller systems or over the course of five years for larger systems. Smaller systems receive an upfront, capacity-based incentive that is adjusted based on expected system performance, called the Expected Performance-Based Buy-down (EPBB). Larger systems receive incentives based on their actual performance over the course of five years, called the Performance Based Incentive (PBI). These two incentive tracks are explained in more detail in the Table below.

CSI Regulatory History

In 2005, the CPUC began developing the CSI program under Executive Order and later in 2006 under State law. First, the CPUC and California Energy Commission issued a joint report in June 2005 that developed an analysis of key issues related to development and implementation of the California Solar Initiative. The CPUC also opened Proceeding (R.) 06-03-004 to work with stakeholders to develop the program.

On December 15, 2005, the Commission issued D.05-12-044, an order that modified existing solar incentive levels and directed CPUC staff to provide recommendations on the program's design. On March 2, 2006, the CPUC opened Proceeding R0603004 to work with Parties through public comment to develop the program.

On January 12, 2006, the CPUC issued an Interim Order that set initial policy and funding for the program. The CPUC was nearing an August 24, 2006 Commission vote on proposed incentive level design, administrative structure, and planning schedule, when SB1 was signed into law on August 21, 2006. While SB 1 codified the state's commitment to the creation of a self-sustaining solar market, it also introduced several unanticipated requirements for the program. In order to conform to state law, the CPUC then worked with Parties to issue a proposed decision on SB1's impacts to the CSI program for public comment; this decision was approved by Commissioners on December 14, 2006.  The program launched on January 1, 2007.

The California Solar Initiative replaced two prior solar programs administered by the California Public Utilities Commission and the California Energy Commission through the end of 2006 (CSI started on January 1, 2007):

• Information on the CPUC's Self Generation Incentive Program which provided incentives to solar projects over 30 kW 
• Information on the CEC's Emerging Renewables Program which provided incentives to solar projects under 30 kW