News Analysis

California Adopts Massive Solar Energy Program

The California Public Utilities Commission (PUC) approved the California Solar Initiative, the largest solar energy program in the history of the U.S., in January 2006. The initiative will provide $2.9 billion in incentives through 2017 for solar systems in the state. The result is expected to be 3,000 MW of solar power spread across one million California rooftops. “We’re confident this will bring solar from a fringe industry into the mainstream,” says Dian Grueneich, one of the five PUC commissioners.

Effective January 1, 2006, the PUC will pay $2.80 per watt of installed capacity for photovoltaic systems—about one-third the total cost for a typical residential system. This amount will decrease by about 10% each year. The PUC also plans to provide incentives for solar-thermal-electric and solar-hot-water systems, though the funding level for these systems has not been determined. Ten percent of the program funds are earmarked for low-income housing. The PUC will pay for the incentives by charging an average $1.12 per customer through monthly electricity and gas bills. This charge, set to decrease over coming years, will be largely offset by the expiration of a surcharge that funded energy deregulation.

Published February 1, 2006