IV. The Prospects for an Expanded Solar Incentive Program

Overall, we are encouraged by the parties' expressions of support for an expanded program to motivate solar development. Because we believe solar technologies hold some promise of becoming a cost-effective, reliable source of energy in California, we state our intent to adopt a solar incentive program that builds on the existing SGIP program and the CEC's ERP program.

In designing the CSI, we must consider a variety of program and policy issues, some of which were raised in the staff report:

· Relationship of the CSI to existing solar incentive programs

· CSI Program capacity goals

· CSI Program duration

· Incentive levels and methods for modifying them over time

· Qualifying technologies

· Project size and ownership requirements

· Education, Marketing and Research

· Metering

· Program administration and oversight

· Program Evaluation

· Treatment of federal tax credits

· Funding levels and sources

· Rate design

· Performance-based incentives

· Financing program options

· Incentives for complementary energy efficiency improvements

· Incentives for low income and affordable housing projects

The staff report provides some assessment of each of these issue areas and the parties' comments provide additional insights. We find, however, that we do not have adequate information to craft the details of a comprehensive, long-term program at this time. We therefore direct our staff to work with the CEC to provide a more detailed proposal for the CSI by the end of the year, building on the information it has already collected and evaluated, for a final decision early in 2006.

In the meantime, we increase funding for solar technologies in the existing SGIP and modify the incentive level for 2006 to $2.80 per watt so that it more closely conforms to the CEC's expected ERP incentive level This stopgap funding and reduced rebate levels are in recognition that the SGIP program has been oversubscribed at the current levels.