8. Incentive Levels

The CSI Thermal Staff Proposal recommends that SWH incentive levels for the single-family low-income applicants be set at 200% of the applicable incentive for the gas-displacing CSI Thermal Program. Parties did not object to this incentive level, although TURN commented that the Commission should assess participation rates and consider raising the incentive if participation is low. We will adopt the low-income SWH incentive level proposed by staff for applicants residing in single-family low-income housing because that level maximizes incentives to low-income properties as required by Section 2866(e)(1) within the program's budget constraints. We agree with TURN that we should review participation and adjust incentives in the future as needed if the rate proves too low to generate sufficient program participation.

Given that we will offer incentives to low-income applicants in multifamily housing as well, the Commission must address an incentive level for these customers. Multifamily SWH installations will likely benefit from economies of scale and can expect lower installed costs per unit of capacity than single-family projects. Moreover, multifamily housing authorities generally have access to grants, loans, and other forms of financing that will not be readily available to single-family applicants. Finally, experience with the MASH program indicates greater demand for solar incentives for multifamily affordable housing than for single-family housing through the SASH Program. For these reasons, we will set the incentive level for multifamily low-income CSI Thermal projects lower than the incentive rate for single-family applicants. The rate shall be set at 150% of the applicable incentive for the CSI Thermal gas-displacing program. Incentives will decline as incentives in the larger CSI Thermal Program decline, as shown in Table 3 below.

Table 3: SWH Incentive Levels for Single-Family

and Multifamily Low-Income Applicants

Step	CSI Thermal Incentive per therm Displaced	SWH Incentive for average system	Single-Family Low-income Incentive per therm displaced	Incentive for average Low-Income system	Multifamily Low-Income Incentive per therm displaced
1	$12.82	$1,500	$25.64	$3,000	$19.23
2	$10.26	$1,200	$20.52	$2,400	$15.39
3	$7.69	$900	$15.38	$1,800	$11.53
4	$4.70	$550	$9.40	$1,100	$7.05

The actual incentive to a given applicant in either the single-family or multifamily low-income customers will be calculated in the same manner as incentives for the larger CSI Thermal program.⁷ For example, single-family low-income incentives will be determined using the existing CSI Thermal single-family calculator, which relies on SRCC OG-300 ratings to determine an estimate of first-year thermal displacement. This energy savings estimate would then be multiplied by 200% of the applicable single-family incentive level (after de-rating for shading and other factors). Likewise, multifamily low-income applicants will use the CSI Thermal multifamily commercial calculator, which uses a model known as TRNSYS to estimate first-year energy savings. This estimate will then be multiplied by 150% of the applicable incentive level.

The multifamily incentives will be paid out in the same manner as incentives are paid in the larger CSI Thermal program. Specifically, as set forth in the CSI Thermal Handbook,⁸ systems smaller than 250 kilowatts in thermal capacity (kW_th) will receive the entire incentive amount (as determined by the incentive calculator) in a single lump-sum payment after the SWH system has been installed and passed any necessary inspections. Systems 250 kW_th and larger will receive 70% of the estimated incentive amount after the system has been installed and passed inspection. After one year of operation, these larger systems will receive the applicable incentive rate multiplied by the first-year's metered energy production, less the original incentive payment.

Incentives for low-income projects will be available until the $25 million CSI Thermal Low-Income budget is fully expended. There are no set-asides between single-family and multifamily low-income projects. Thus, funding is available on a first-come, first-serve basis, and no funding is specifically reserved for single-family or multifamily projects.

In comments on the proposed decision, PG&E, CCSE, and SoCalGas recommend incentive caps similar to those adopted by the Commission in D.10-01-022. In that decision, the Commission capped incentives for residential CSI Thermal applicants at 125% of the incentive for an average residential system and at $500,000 for commercial and multifamily systems. (D.10-01-022 at 33.) We agree that incentive caps should also apply to low-income SWH incentives. We will cap incentives to single-family low-income applicants at 200% of the caps in the general market CSI Thermal program, as shown in the table below:

Table 4: CSI Thermal Program Single-Family Residential Project Incentive Caps

We will cap incentives to multifamily low-income systems at $500,000, the same level as in the general market CSI Thermal program. PG&E, CCSE and SoCalGas had suggested a higher cap for multifamily systems, but given the limited funds for low-income SWH incentives overall, we believe a cap of $500,000 per system is sufficient and will allow more projects to be installed under the program.

⁷ See D.10-01-022, Section 7.3 at 41.

⁸ See CSI Thermal Handbook, Section 3.2 (Multifamily/Commercial Incentives), August 2011, at 17-20.