1. Damon Franz (df1@cpuc.ca.gov) California Public Utilities Commission ACEEE 2010 Hot Water Forum May 13, 2010 The California Solar Initiative - Thermal Program

2. 2 Introduction Statewide effort to transform the market for solar thermal through rebates, standards, training and marketing What is the CSI-Thermal Program?

3. 3 Introduction Rebates are now available! CSI-Thermal Program began offering rebates to single-family residential customers on May 1, 2010 CPUC is currently finalizing the multi-family and commercial portion of the program Applications for low-income housing and non-water heating technologies likely in the fall or early next year

4. 4 Program Development Timeline July 2007 – December 2009: SWH rebates introduced as a pilot program in San Diego, administered by CCSE. October 2007: Assembly Bill 1470 (Huffman) directs CPUC to study the results of the Pilot, and if cost-effective, design and implement a statewide program April 2009: Itron releases analysis of pilot data on SWH rebates

5. 5 Program Development Timeline July 2009: CPUC Energy Division issues Staff Proposal recommending statewide rebate program January 2010: Decision authorizing statewide incentive program approved by the CPUC Commissioners May 1, 2010: Incentives are available for single-family residential customers May 24, 2010: Program Administrators file Handbook for Multifamily/Commercial Incentives

6. 6 CSI-Thermal Program Design Funding is separate for SWH systems that displace natural gas than for those that displace electricity (as required by law) N-G displacing systems are funded from N-G ratepayers under AB 920 Electric-displacing systems are funded from electric ratepayers under CSI Incentive amounts for the two types of systems are different due to differing economics Both types of systems use the same application forms, database, etc.

7. 7 Design Builds on Prior Efforts The CSI-Thermal Program incorporates lessons learned from the SWH programs of the 1970s and 1980s Incentives that are too rich can increase the retail price for SWH systems Quality control is essential Government support is not eternal, and we should plan for the day when it no longer exists by reducing incentives gradually

8. 8 CSI-Thermal Program Goals Increase the size of the market in California Install the equivalent of 200,000 residential systems, displacing 585 million therms of natural gas Increase consumer confidence and understanding of SWH technology Program requirements and inspections protect consumers ensure quality systems are installed SRCC Certification is required Maximum allowances on shading and other installation parameters Random inspections and penalties ensure that contractors comply with quality standards

9. 9 CSI-Thermal Program goals Support reductions in the cost of SWH systems through efficiency and innovation Installer training and “learning by doing” likely to reduce labor costs Competition for market share can spark innovation that drives technology costs lower Reduce other market Barriers Example: Program will provide training for local permitting officials to reduce cost and time of obtaining a permit

10. 10 Market Transformation The CSI-Thermal Program is designed to drive market transformation through three parallel efforts Cash-back rebates for solar thermal systems Funding for advertising, public outreach and awareness Training for installers and building inspectors

11. 11 Rebates Total of $305.8 million in rebates structured to drive market transformation Incentives start high to encourage market entrants, then decline to foster competition Incentives start at about $1,500 for a single-family system gas-displacing system and decline in 4 steps to $550 for the same system Incentive declines are triggered by growth on the natural- gas side of the market Rebates are based on system output to encourage efficient, well-performing systems

12. 12 Rebates Rebates split between two customer classes 40% of rebates set aside for single-family residential class Multi-family/commercial class may use up to 60% of rebates Capped at $500,000 per system Large systems more cost-effective, but small systems have more “market transformation” potential

13. 13 Rebates – Natural Gas StepRebate for average system Maximum rebate Incentive per therm displaced Funding amount 1$1,500$1,875$12.82$50 M 2$1,200$1,500$10.26$45 M 3$900$1,125$7.69$45 M 4$550$687.5$4.70$40 M

14. 14 Rebates – Electric StepRebate for average system Maximum rebate Incentive per kWh displaced 1$1,010$1,263$0.37 2$820$1,025$0.30 3$600$750$0.22 4$380$475$0.14

15. 15 Market Facilitation Total budget of $31.25 is split between marketing, outreach and training PAs will undertake a statewide marketing campaign to increase customer awareness of solar thermal technologies Technical training will be offered to increase the pool of qualified installers Training and outreach will be offered to local permitting officials to reduce the time and cost of obtaining building permits

16. 16 Measurement and Evaluation Program has a budget of $6.125 million for measurement and evaluation A sample of systems will be monitored and the data recorded Participants and non-participants will be surveyed Market knowledge gained from this program will inform and improve future efforts

17. 17 Questions What are the additional barriers to widespread market adoption of solar thermal technologies? Which technologies have the greatest potential for widespread adoption? How can government best promote these technologies with minimal distortions of the market? How can we encourage creative financing arrangements to mitigate high up-front costs? Others questions?