Damon Franz (df1@cpuc) California Public Utilities Commission ACEEE 2010 Hot Water Forum

1. The California Solar Initiative -Thermal Program Damon Franz (df1@cpuc.ca.gov) California Public Utilities CommissionACEEE 2010 Hot Water Forum May 13, 2010

2. Introduction • Statewide effort to transform the market for solar thermal through rebates, standards, training and marketing What is the CSI-Thermal Program?

3. Introduction • Rebates are now available! • CSI-Thermal Program began offering rebates to single-family residential customers on May 1, 2010 • CPUC is currently finalizing the multi-family and commercial portion of the program • Applications for low-income housing and non-water heating technologies likely in the fall or early next year

4. Program Development Timeline • July 2007 – December 2009: SWH rebates introduced as a pilot program in San Diego, administered by CCSE. • October 2007: Assembly Bill 1470 (Huffman) directs CPUC to study the results of the Pilot, and if cost-effective, design and implement a statewide program • April 2009: Itron releases analysis of pilot data on SWH rebates

5. Program Development Timeline • July 2009: CPUC Energy Division issues Staff Proposal recommending statewide rebate program • January 2010: Decision authorizing statewide incentive program approved by the CPUC Commissioners • May 1, 2010: Incentives are available for single-family residential customers • May 24, 2010: Program Administrators file Handbook for Multifamily/Commercial Incentives

6. CSI-Thermal Program Design • Funding is separate for SWH systems that displace natural gas than for those that displace electricity (as required by law) • N-G displacing systems are funded from N-G ratepayers under AB 920 • Electric-displacing systems are funded from electric ratepayers under CSI • Incentive amounts for the two types of systems are different due to differing economics • Both types of systems use the same application forms, database, etc.

7. Design Builds on Prior Efforts • The CSI-Thermal Program incorporates lessons learned from the SWH programs of the 1970s and 1980s • Incentives that are too rich can increase the retail price for SWH systems • Quality control is essential • Government support is not eternal, and we should plan for the day when it no longer exists by reducing incentives gradually

8. CSI-Thermal Program Goals • Increase the size of the market in California • Install the equivalent of 200,000 residential systems, displacing 585 million therms of natural gas • Increase consumer confidence and understanding of SWH technology • Program requirements and inspections protect consumers ensure quality systems are installed • SRCC Certification is required • Maximum allowances on shading and other installation parameters • Random inspections and penalties ensure that contractors comply with quality standards

9. CSI-Thermal Program goals • Support reductions in the cost of SWH systems through efficiency and innovation • Installer training and “learning by doing” likely to reduce labor costs • Competition for market share can spark innovation that drives technology costs lower • Reduce other market Barriers • Example: Program will provide training for local permitting officials to reduce cost and time of obtaining a permit

10. Market Transformation • The CSI-Thermal Program is designed to drive market transformation through three parallel efforts • Cash-back rebates for solar thermal systems • Funding for advertising, public outreach and awareness • Training for installers and building inspectors

11. Rebates • Total of $305.8 million in rebates structured to drive market transformation • Incentives start high to encourage market entrants, then decline to foster competition • Incentives start at about $1,500 for a single-family system gas-displacing system and decline in 4 steps to $550 for the same system • Incentive declines are triggered by growth on the natural-gas side of the market • Rebates are based on system output to encourage efficient, well-performing systems

12. Rebates • Rebates split between two customer classes • 40% of rebates set aside for single-family residential class • Multi-family/commercial class may use up to 60% of rebates • Capped at $500,000 per system • Large systems more cost-effective, but small systems have more “market transformation” potential

13. Rebates – Natural Gas

14. Rebates – Electric

15. Market Facilitation • Total budget of $31.25 is split between marketing, outreach and training • PAs will undertake a statewide marketing campaign to increase customer awareness of solar thermal technologies • Technical training will be offered to increase the pool of qualified installers • Training and outreach will be offered to local permitting officials to reduce the time and cost of obtaining building permits

16. Measurement and Evaluation • Program has a budget of $6.125 million for measurement and evaluation • A sample of systems will be monitored and the data recorded • Participants and non-participants will be surveyed • Market knowledge gained from this program will inform and improve future efforts

17. Questions • What are the additional barriers to widespread market adoption of solar thermal technologies? • Which technologies have the greatest potential for widespread adoption? • How can government best promote these technologies with minimal distortions of the market? • How can we encourage creative financing arrangements to mitigate high up-front costs? • Others questions?