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California and Federal Solar Electric Grid Tie System Incentives Residential Systems - New Construction Solar Electric Systems installed as part of New Residential Construction are eligible for a $2.50 per watt Incentive administered by the the CEC (California Energy Commission) as part of the New Solar Homes Partnership (NSHP). Visit Go Solar California for more information. To be eligible for this incentive builders will be required to incorporate levels of energy efficiency 15% stricter than Title 24 Standards and use high-performance solar modules and inverters. This program is called Expected Performance Based Incentive, or EPBI, and it has more stringent requirements for location, orientation, tilt and shading than existing residential or commercial systems or the incentive amount is slightly reduced. This NSHP PV Calculator will help determine the appropriate incentive when applying for a NSHP Incentive Reservation. The actual power produced by the the System will be field verified and will be the basis for adjustments to the rebate amount. The size of the System must be equal or less than the estimated usage of the residence. CEC Rebates are considered Taxable Income by the IRS but not by the California Franchise Tax Board. A licensed California Contractor or the owner must do the installation. A Net Metering agreement allows you to send the excess power you produce back to your Electric Service Provider and get credit against your utility bill. These credits are generated by the retail price of the energy at the time you produce it, and your yearly bill will be based on the difference between the value of the electricity sent to the grid generated vs the value of the energy used from the grid over that year. This should be a consideration in sizing your system. You also have the option to get credit on a Time Of Use (TOU) basis if you choose, which will credit a higher price for power sent to the grid during peak hours, and a lower price for the energy you buy at night time. Choosing this option might reduce the size of your system since the value of the power you send will be valued higher per kWh than the value of power you receive. The TOU rates are under scrutiny at this time and may be adjusted. There is also a Federal Tax Credit or Cash Grant based on 30% of the cost of the System and the Residential Tax Credit is no longer limited to $2000.00. The Construction Cost of The System is exempt from property tax increases until 2017. The California Solar Initiative will reduce the incentive as total installed Mw trigger points are reached. Commercial and Existing Residential Systems Existing Residential Systems less than 30kW initially will receive a one time up front incentive (currently $1.10 per rated watt is the maximum for PG&E), based on expected system performance. The expected performance must be equal or less than the previous 12 months electric usage. This rebate will be administered by the California Public Utility Commission thru your Electric Service Provider. Expected performance will be calculated based on equipment ratings and installation factors, such as geographic location, tilt and shading. This incentive structure is called Expected Performance Based Buydown, or EPBB. This CSI Calculator will help determine an appropriate incentive when applying for a CSI incentive reservation. Only optimum systems will qualify for the maximum rebate per CEC rated watt however. Commercial Systems under 30kW can qualify for a similar up front incentive, the rebate is now $1.10 per watt. EPBB customers must install a separate meter with +/-5% accuracy that displays and records the System's power output generation for 5 years if their inverter meter does not qualify. EPBB customers over 30kW must contract with a Performance Monitoring and Recording Service for 5 years. All EPBB customers are exempt from the monitoring and recording if they show that the cost exceeds 1% of the System Cost (.5% if >30kW). The metering, communication and monitoring costs are excluded from the System Cost. Systems greater than 30kW in size will be paid monthly by the CPUC based on the amount of energy that they actually produce. Currently this Performance Based Incentive (PBI) is $0.15 per kWh for PG&E Residential and Commercial Customers. The PBI lasts five years and is set at the time of reservation, not installation. It includes power sent to the grid plus the power you produce and use on site, measured by a special performance meter, purchased by the owner, that is accurate to +/-2%. This performance data, recorded at 15 minute intervals, includes current system output, net power sent to the Utility and the customer's current usage. The CPUC further requires all PBI customers pay for five years of data communication and Performance Monitoring and Recording Services from a listed PMRS provider. There is no cost exemption for PBI customers. These requirements should be addressed in the design phase for compatibility between the meter and the performance monitoring service. Once again the system should be sized at or below the electric usage from the previous 12 mos. The current PBI pay back is calculated to be levelized over 5 years to the EPBB upfront payment. Reductions in incentives are tied to MW triggers as more system applications are approved and funds reserved. Go to the CSI Trigger Tracker to find the latest incentive levels statewide. Customers with EPBB Systems under 30kW can opt for PBI if they wish. Both Commercial and Residential Systems can get credit for the power they send back to the grid with the Net Metering (NEM) option which allows you to get credit on your bill for power that you send back to your Electric Service Provider. These credits are generated by the retail price of the energy at the time you produce it, and your yearly bill will be based on the difference between the value of the electricity generated vs the value of the energy used over that year. Your utility is not required to pay you for energy you produce over and above your usage, however, and you should expect a price closer to wholesale for that energy if you get it at all. You also have the option to get credit on a Time Of Use (TOU) basis if you choose, which credits a higher price for daytime production sent to the grid, and a lower price for the energy you buy at night time. Choosing this option will require a smaller system to equalize the value of the power you use since the value of the power you send will be much higher per kWh during peak hours. TOU rates schedules are currently being debated. A Licensed California Contractor or the owner must do the installation whichever plan you use. Commercial systems and new Residential Construction must pay Federal Income Tax on the amount of their CEC incentive. Existing residential systems getting their rebate from the utility can opt to not pay federal tax (Sec 136 IRC) but must reduce the basis of their 30% Federal Tax Credit by the amount of the rebate. (This lowers the net cost only if your tax rate is under 30%.) Rebates from the CEC are not considered Taxable Income by the California Franchise Tax Board. Systems smaller than 30kW may choose the Performance (PBI) method if they wish. This will spread the taxes on the Rebate over 5 years. It is not clear how the IRS will tax PBI incentives. Commercial Systems are eligible for a Federal Investment Tax Credit or Cash Grant based on 30% of the total cost of the System. Residential Systems are also eligible for the 30% Tax Credit and are no longer limited to $2000.00. Businesses can also Accelerate the Depreciation over 5 years with an 85% basis of the Total System Cost. Newly constructed active Solar Grid Tie Systems are exempt from California Property Tax increases until 2017. These Incentives are being financed by a surcharge on every electric customer's Utility Bill. Presently this surcharge will add, for an average consumer, about $16 per year to their Utility Bill. Visit Go Solar California and PG&E for more information on the California Solar Initiative. This article on Solar Payback has more information on rebate taxability. 2008 Performance Meter Requirements Commercial and Existing Residential Systems Incentive Type System Size Minimum Meter Accuracy Performance Monitoring and Reporting Requirement Cost Cap for PMRS Exemption EPBB less than 20kW +/- 5% Yes(1) 1% EPBB 20 kW or greater +/- 5% Yes(1) 1% EPBB 30 kW or greater +/- 5% Yes(1) .5% All PBI (2) All +/- 2% Yes N/A (1) Exempt if PMRS Cost exceeds Cap Percentage of the Total System Cost (2) Requires separate Stand Alone Meter For more information call (707) 462-2427 or E-mail Collins By Design Cal Contractors Lic #B557124 Pictures compliments of Advance Power and Zapsucker.com