California Passes Long-Term Solar Energy Plan

The California Public Utilities Commission passed the California Solar Initiative (CSI) by a vote of 3 to 1 with Commissioner Geoffrey Brown voting against it. Commissioner John Bohn recused himself, citing a conflict of interest with his investments in Chevron and General Motors.

The plan is both historic and monumental for the solar industry in the U.S. and beyond. It allots USD $3.2 billion for solar energy rebates in the state for the next 11 years, providing for the installation of approximately 3000 MW of solar energy, roughly the power equivalent of six large natural-gas fired power plants.

This moment also ends what has been a roller-coaster ride for solar advocates in California and beyond who have been waiting for the state to breathe new life into support for solar. The CSI plan effectively supplants two of the critical features that were present in the ill-fated "Million Solar Roofs Initiative" or SB 1, which faltered twice in the California legislature. It provides the long term rebate plan and the funds to back it up.

The CPUC will provide $2.8 billion in customer incentives for solar projects on existing residential buildings, as well as all public buildings, industrial facilities, businesses, and agricultural facilities. The California Energy Commission, meanwhile, will provide $400 million in incentives for new homes, specifically targeting collaborations with the builder / developer community.

Solar industry executives are already considering the possibilities for expansion (see related story at the jump below).

The CSI plan does not include a mandate that new homes in California include solar energy, nor does it include any licensing changes to who is eligible to install solar projects in the state. It also does not require that solar installation work be done as so-called "prevailing wages," essentially union wages. All three items exposed and exacerbated deep opposition between the majority of the solar industry and certain union interests that backed some of the proposals.

Despite some of this tension, public support for the plan was repeatedly mentioned as a critical factor in bringing this plan to the CPUC. Over the last three months, 50,000 people have written to the California Public Utilities Commissioners to ask them to pass a long-term solar rebate program - more public comment than the CPUC has received on any issue they have ever considered, including the 2001 energy crisis.

Rebates beginning this year will stay at the $2.80 per watt mark and will gradually decline for the following ten years. By design, the rebates will decline by 10 percent per year through the duration of the program. The money will come from existing funds already earmarked for solar power and a very small additional surcharge on monthly electric bills over eleven years.

The PUC rebates may also move from a capacity-based approach to a performance-based approach or some variation of the two. Details will be finalized over the coming months through stakeholder workshops.