We’ve just learned that the California Public Utilities Commission (CPUC) has voted to increase the California Solar Initiative’s Thermal Rebate (CSI Thermal program) for both residential and commercial customers. The residential rebate will go up by a significant 45% in the Step 1 incentive pool, while the commercial rebate will increase by about 13%. In addition, there will be a larger budget for Step 1 incentives, which will be offset by lower incentives in the later steps.
These increases were due to the CPUC acknowledging that the market demand for solar thermal installations in California had not –so far–responded to the old incentive levels, especially in the residential market, but also in the commercial sector.
As Free Hot Water discussed in a recent update of the CSI Thermal program, less than 2% of the residential Step 1 CSI Thermal budget has been allocated in PG&E, CCSE/SDG&E, and SoCalGas territories.
For commercial programs, just 6.5% of the Step 1 budget has been used in the Southern California Gas (greater Los Angeles) area. The commercial numbers were somewhat better for PG&E (34%), which is based in the San Francisco Bay and Northern California area. In the CCSE/SDG&E territory, which represents the greater San Diego area, 54% of the Step 1 budget has been used.
All of the above has been accomplished after two years, and the program is set to expire at the end of 2017. The CPUC anticipated that much, if not all, of the Step 1 rebate would be used by now, so something was clearly wrong. (Low natural gas prices.) And so, after petitioning by CALSEIA and several hearings, the CPUC finally decided to boost the incentive amounts for all sectors, except for the new low-income housing solar thermal program, which was just launched in April. Naturally, the utilities objected to the increase and wanted more market studies done, but the CPUC said there was no time to waste doing studies. Clearly, the incentive had failed to attract interest, and the solution was to make it more attractive, reducing risk.
Under the revised incentive structure, retroactive to July 3, 2012, rates for single-family homes will be increased by 45% (from $12.82 to $18.59 per Therm) at the Step 1 incentive level, and by 27.78% (from $10.26 to $13.11 per Therm) at the Step 2 incentive level. However, the step 4 rebate will be significantly lower.
New CSI Thermal Residential Rebates
Previously, the maximum incentive was $1875. There was no mention of a maximum in the revised ruling, however. So, the amount now may be purely based on estimated Therms displaced annually by a CSI Thermal approved SRCC rated OG-300 solar thermal system. (This assumption needs to be confirmed.)
Revised Solar Thermal Rebate for Electric Water Heating Customers
Electric water heating customers (there are relatively few in California) will also see an increase in the rebate amount.
- In Step 1, their rebate will go up from an average of $1110 to $1467.
- The incentive in Step 1 has risen to .54/kWh from .37/kWh.
- For the even more rare commercial/multifamily electric water heating systems in California, the Step 1 incentive has gone up from .37/kWh displaced annually to .42/kWh.
- Since commercial systems are highly variable, no average rebate amount was estimated.
New CSI Thermal Commercial/Multifamily Unit Rebate
- For multifamily and commercial customers, rates will be increased by 13.33% at the Step 1 incentive level. But as with single-family rates, the rate for Step 4 will be decreased by approximately one-third compared to the original incentive structure.
- Consequently, for Step 1, the commercial rebate rate will be increased from $12.82/Therm displaced annually to $14.53/Therm displaced.
- However, Step 2 will be decreased from $10.26/Therm displaced annually to $9.88/Therm.
- The $500,000 maximum incentive per project remains the same.
- The CSI Thermal Calculator has not been updated for this program as of mid August 2012, but we strongly recommend its use when the new incentive levels are applied.
So, once again, the CPUC is trying to sweeten the pot, hoping that apartment building owners will be incentivized to take the financial risk and act on a solar thermal solution sooner than later.
So, just how did the CPUC fund these higher rebates? Essentially by shifting around the time table and the allocation of CSI funds for each sector. Consequently, the single-family residential program previously received 40% of the total rebate budget. Now, home owners will receive 45%. Multifamily/commercial portion will now have access to just 55% of the rebate budget, reduced from 65%. Ultimately, the accounting and reallocation of funds for various steps does not increase the original program budget.
Other Decisions in the Ruling
The CPUC also noted that the CSI Thermal’s new marketing initiative had also just launched in April and needed more time before adjusting. Finally, the board members rejected the notion that the utilities needed to expand their solar thermal training programs, though it noted (as we did months ago) that there were relatively few solar thermal installers qualified under the program. The CPUC agreed with the Utilities that more training and outreach needed to be done by installers, solar educators, and manufacturers.
Free Hot Water applauds the CPUC for acting expediently to increase the incentive levels for both commercial and residential programs. Nevertheless, with the price of natural gas still relatively low, time will tell whether the new Step 1 incentive is enough to jolt the residential solar water heating market.
For the solar thermal commercial sector, the extra incentive should make it easier to establish funds for new solar thermal PPA financing. As solar thermal engineers and designers and distributors, we sincerely hope to be one of the first California businesses to see an increase in solar thermal projects in California.
You can read CPUC’s entire CSI Thermal decision here (PDF download).
Are you a California solar thermal installer? What are your thoughts on the new amounts? Will they make a difference? Please let us know in the comments section below. If you have any other questions about the program, please contact us.