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 CSI Program in 2006 via Senate Bill (SB) 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).SGIP still provides incentives for other clean energy technologies, but no longer incentivizes distributed solar generation.
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 The Center for Sustainable Energy (CSE) in SDG&E's 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 budget:
- A research, deployment 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 Administrator, Itron Inc., and has a budget of $50 million.
- The Single-family Affordable Solar Homes (SASH) Program, providing solar incentives to single-family low income housing; the SASH program is administered through the SASH Program Manager, GRID Alternatives, and as of January 2015, has a re-authorized budget of $54 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 CSE, and as of January 2015, has a re-authorized budget of $54 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, Southern California Gas Company (SoCalGas), 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 by publicly-owned utilities (POUs). The statewide effort includes the CSI Program – 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 the installation of 3,000 MW of distributed solar generation and there is a statewide budget of $3.3 billion. The CSI Program is a subset of the statewide Go Solar California campaign.
Table 1. Go Solar California Campaign by Program Component, 2007-2016
||California Solar Initiative (CSI)
||New Solar Homes Partnership (NSHP)
||California Public Utilities Commission
||California Energy Commission (CEC)
||Publicly Owned Utilities|
|Solar Goals (MW)
||All systems in IOU areas except new homes
||New homes, IOU territories
||All systems in POU areas|
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 MW goal for the incentive program into 10 programmatic incentive level steps, and assigned a target amount of MW 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 capacity available in a particular incentive step level for a particular customer class is reserved via CSI customer applications, 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. PG&E’s and SCE’s CSI programs are fully subscribed, and as August 2015, CSE’s non-residential program is the only CSI program with remaining available CSI capacity. See the CSI Trigger Tracker for the current funds available in each step.
Figure 1. Overview of the CSI Step Level Changes
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. Systems smaller than 30 kW receive an upfront, capacity-based incentive that is calculated based on expected system performance, or the Expected Performance-Based Buy-down (EPBB). Systems 30 kW or larger receive incentives based on their actual performance over the course of five years, via a 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 CEC issued a joint report in June 2005 that provided analysis of key issues related to development and implementation of the CSI Program. The CPUC also opened Proceeding (Rulemaking or R.) 06-03-004 to develop the program.
On December 15, 2005, the Commission issued D.05-12-044, a decision 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 R.06-03-004 to work with stakeholders through a public process and develop the program.
On January 12, 2006, the CPUC issued an Interim Order that established initial policies and funding for the CSI program. The CPUC was nearing an August 24, 2006 Commission vote on the proposed CSI incentive level design, administrative structure, and planning schedule, when Bill SB 1 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 CSI program. In order to conform with state law, the CPUC then worked with stakeholders to issue a proposed decision on SB 1's impacts on the CSI program. This decision was approved by the Commission on December 14, 2006. The CSI program subsequently launched on January 1, 2007.
The CSI Program, which began on January 1, 2007, replaced two prior solar programs administered by the CPUC and the CEC through the end of 2006: