Chapter 1-Guidelines for 2009 California Solar Program

CHAPTER 1: Introduction
Senate Bill 1 (SB 1)1 directs the California Energy Commission (Energy Commission) to establish
eligibility criteria, conditions for incentives, and rating standards for projects applying for
ratepayer‐funded incentives for solar energy systems.2 According to SB 1, this document
establishes minimum guidelines to implement California’s solar energy system incentive
programs overseen by the Energy Commission, the California Public Utilities Commission
(CPUC) and local publicly owned electric utilities (POUs). These Guidelines are not intended to
serve as the sole requirements for solar energy system incentive programs.3 Other requirements
specific to the Energy Commission, CPUC and POU programs are expected to be addressed and
delineated in their respective program guidebooks or handbooks.
The entities implementing these solar energy system incentive programs under SB 1 are referred
to in this document, as “program administrators.”4 The solar energy system incentive program
administrators must incorporate the requirements in this document as part of their respective
program guidebooks or handbooks.
This document covers these topics:
• Program and legislative background, and basis for guidelines.
• Schedule for implementing these guidelines.
• Solar equipment component requirements.
• System design and installation requirements.
• Energy efficiency requirements.
• Reporting requirements for California publicly owned electric utilities

Background
SB 1 is the culmination of Governor Schwarzeneggerʹs “Million Solar Roofs Initiative” and builds
on the CPUC’s California Solar Initiative (CSI) program,5 the Energy Commission’s New Solar
Homes Partnership (NSHP), and existing publicly owned utility solar energy system incentive
programs. SB 1 directs total expenditures of up to $3,350,800,000 by 2017 with goals to install solar
energy systems with a generation capacity equivalent of 3,000 megawatts, to establish a selfsufficient
solar industry that in 10 years solar energy systems are a viable mainstream option for
homes and commercial buildings, and in 13 years to put solar energy systems on 50 percent of new
homes in 13 years. The overall goal is to help build a self‐sustaining solar electricity market
combined with improved energy efficiency in the state’s residential and non‐residential buildings.
Three specific expectations established by SB 1 must be met for the ratepayer‐funded incentives:
• High‐quality solar energy systems with maximum system performance to promote the
highest energy production per ratepayer dollar.
• Optimal system performance during peak demand periods.
• Appropriate energy efficiency improvements in the new and existing home or commercial
structure where the solar energy system is installed.
To guide the state in developing a successful solar photovoltaic (PV) program that is consistent
with the Governor’s Million Solar Roofs Initiative, several principles were described in the 2005
Integrated Energy Policy Report (IEPR). These principles include:
• Leveraging energy efficiency improvements should be a primary consideration in deploying
solar panels systems. To participate in the PV program, new buildings should be required to exceed
the current building standards, while existing buildings should be required to improve their
efficiency. Combining energy efficiency measures with PV will ensure proper sizing of PV

purchasers and electricity consumers.
• Rational targeting of PV deployment to achieve the greatest cost benefit should be a central
feature of a large‐scale solar program. Solar installations should be targeted to climate zones
with high peak demands for air conditioning and where solar systems can provide the most
benefit.
• Transitioning away from capacity‐based incentives to performance‐based incentives and
integrating energy efficiency and time‐of‐use energy considerations should be a priority.
The IEPR also recognized the common policy vision of the loading order adopted by the state’s
principal energy agencies in the Energy Action Plan and the 2003 IEPR. The loading order
establishes the following priority for the development of energy resources: 1) energy efficiency and
demand response, 2) renewable energy resources and distributed generation, and 3) clean, fossil
fuel, central‐station generation. The Governor highlighted the importance of the Million Solar Roofs
Initiative and the aggressive pursuit of all cost‐effective energy efficiency, consistent with the
loading order in his energy policy to the Legislature.
There are also several other energy policy directives that are important to address as the Energy
Commission responds to the SB 1 mandates:
• Assembly Bill 32 (AB 32, Núñez, Chapter 488, Statutes of 2006) and the Climate Action
Initiative – AB 32 reinforced Governor Schwarzenegger’s Executive Order S‐3‐05 placing
California in a global leadership position by establishing aggressive greenhouse gas
emissions reduction targets. The Climate Action Team’s 2006 Report to the Legislature
highlighted the need to expand energy efficiency, coupled with increased installation of
photovoltaic systems.
• Energy Efficiency Goals and Resource Procurement – Senate Bill 1037 (SB 1037, Kehoe,
Chapter 366, Statutes of 2005) and Assembly Bill 2021 (AB 2021, Levine, Chapter 734,
Statutes of 2006) directed electricity corporations subject to the CPUC’s authority and local
publicly owned electric utilities, respectively, to first meet their resource needs through all
available energy efficiency and demand response resources that are cost effective, reliable
and feasible.
• Green Building Initiative – Governor Schwarzenegger’s Executive Order S‐20‐04 was his
first concrete step to pursue the loading order. The Green Building Initiative (GBI) directed
agencies to reduce state building electricity use by 20 percent by 2015, using all costeffective
measures described in the Green Building Action Plan, and strongly encourage
commercial building owners to take aggressive action to reduce electricity use with the
same measures. The GBI urged the CPUC to apply its energy efficiency authority to
improve commercial building energy efficiency by the 20 percent goal.
• The CPUCʹs October 18, 2007, Decision 07‐10‐032, reaffirmed the Energy Action Plan
commitment to the loading order and states Californiaʹs highest priority is to increase

energy efficiency measures. Through this decision, the CPUC adopted goals for new
residential construction to be net zero energy by 2020 and new commercial construction to
be net zero energy by 2030. The CPUC concluded that energy efficiency must become
“business as usual” if the state is to meet growing energy demand and combat global
warming.
To meet all the policy directives, the goal of the SB 1 incentive programs is to create a selfsustaining
market for solar buildings using high levels of energy efficiency and high performing
solar energy systems. Combining high levels of energy efficiency and high solar energy system
performance maximizes the major SB 1 investments, helps reduce greenhouse gas emissions, and
maximizes the value of solar industry’s products and services to California ratepayers and
consumers.
These Guidelines establish eligibility criteria, conditions for incentives and rating standards that
align California’s solar energy system incentive programs to meet the SB 1 goals.

 

Schedule
Under SB 1, the Energy Commission must establish eligibility criteria, conditions for incentives, and
rating standards, by January 1, 2008. SB 1 also directs the CPUC and the POUs to implement solar
energy system incentive programs for ratepayers subject to their respective jurisdiction by January
1, 2008. The solar energy system incentive programs established by the CPUC and POUs must be
consistent with the directives of SB 1, and meet these Guidelines.
As discussed in the Energy Commission’s August 2007 staff report6 Eligibility Criteria and Conditions
for Incentives for Solar Energy Systems, Senate Bill 1, a transition period is needed for the CPUC and
POU solar energy system incentive programs to conform with all of the eligibility criteria,
conditions, and rating standards established in these Guidelines.
These Guidelines create minimum program requirements to be met by January 1, 2008 (Chapter 2)
and allow for up to an 18‐month transition period for full compliance with all the eligibility criteria,
conditions, and rating standards described in Chapters 3 through 5. Chapter 6 applies only to
publicly owned utilities and the requirement must be met annually beginning June 1, 2008. All
program administrators must conform their programs as necessary to these Guidelines no later
than July 1, 2009, except as noted. Program administrators may voluntarily conform to the
Guidelines before that date and are encouraged to do so to the extent feasible. These requirements
shall apply only to new incentive applications that are received on or after a program administrator
has implemented these requirements. Applications submitted to solar energy system incentive
programs for incentives before January 1, 2008, are not required to comply with these Guidelines

POUs with peak demand of 200 MW or less as reported for calendar year 2006 are required to
comply with Chapters 2, 3, and 6 only for 2008. These POUs may delay implementing the
requirements in Chapters 4 and 5; however, they must comply with the requirements as
described in Chapters 4 and 5 no later than January 1, 2010.

Audits
Senate Bill 1 requires the Energy Commission to conduct annual random audits of solar energy
systems to evaluate their operational performance7. To carry out this requirement, the Energy
Commission will work closely with the program administrators.