II. Program Background and Overview of Issues

Currently, PG&E, SCE, SDG&E and SDREO administer the SGIP, which provides monetary incentives for non-utility parties to install distributed generation, including solar photovoltaic technologies with capacity of more than 30 kilowatts (kW). This program, which we adopted in Decision (D.) 01-03-073 in response to Assembly Bill (AB) 970 and modified in accordance with AB 1685, has so far been very successful, funding $421 million in rebates to solar projects representing 113 MW of power since 2001.

In addition to this Commission's program, the CEC administers the Emerging Renewables Program (ERP), which provides incentives for solar photovoltaic projects of 30 kW or less, most of which are installed by or for residential customers. The program, authorized by AB 1890 in l996, and modified by SB 90 in 1997, SB 1194 in 1999, SB 1038 in 2002, and SB 135 in 2004; has allocated $371 million and has provided incentives to over 50 MW of installed systems since 1998. Since the 2000-2001 energy crisis, both the CEC's and the Commission's solar incentives programs have consistently encumbered their expected funding allocations, requiring additional funds to be transferred to the programs. Together, these programs have allocated almost $1 billion in solar incentives, funded through utility rates.

The complementary objectives of these existing programs are to add clean energy to peak demand resources, to reduce risk by diversifying the state's energy portfolio, and reduce the demand for transmission and distribution system additions. Significantly, the benefits of solar technologies also motivate us to transform the existing market in a way that makes solar products cost-effective without incentives. The Energy Action Plan, signed by members of the Commission and the CEC, recognizes the benefits of solar technologies for meeting California's energy needs in the future and anticipates additional incentives for solar development.

The parties who commented on the CSI proposal generally expressed strong support for solar project development, for an explicit preference for solar projects that complement other energy strategies, and for a commitment to program performance and cost-effectiveness.