Perhaps in no other market has a large solar incentive program been as successful as in California. As the program’s successive incentive offerings were fulfilled incentives were reduced until now, when almost all incentives have been exhausted—two years before planned. Yet over the past year or so a growing number of people in California have said it’s a good thing.
Today Green Tech Media Senior Editor Stephen Lacey dove deeper into the end of program that spurred gigawatts of solar installations in the Golden State. “While many solar incentive schemes have crashed and burned, California is quietly closing out its own state program two years ahead of schedule—and hardly anyone has taken notice,” Lacey wrote.
When Gov. Arnold Schwarzenegger (R) and the state legislature launched the California Solar Initiative (CSI) in 2007 its goal was to help the state install nearly 2,000 megawatts of solar projects by 2016. To say the state surpassed that goal is almost understating the fact. By the end of 2013 the state had installed 2,746 megawatts of solar power, according to the Solar Energy Industries Association (SEIA) and it wasn’t slowing down in 2014.
Lacey observed that residential and commercial sectors in California now account for 2,825 megawatts of solar power in the state, “surpassing the initial CSI target of 1,940 megawatts by 2016.” He added, “California's solar industry now supports more workers than all of the state's investor-owned utilities combined.”
“But unlike in other regions, installers in California are not closing their businesses or complaining about the end of the solar market as incentives disappear. Instead, they're installing projects in record numbers,” Lacey said. “According to data from GTM Research, 72 percent of all residential solar projects in the state were completed without any state incentives in the second quarter of 2014. California installers will deploy more than 1 gigawatt of residential and commercial projects this year, the majority completed without the help of the CSI incentives.”
One of the factors that has contributed to the continued installation of residential and commercial solar in the state is high electric prices. This has allowed solar power to come closer to parity—equality with other energy sources—quicker than in most other states, except Hawaii and Connecticut, perhaps. The state also benefited from the eight year extension of the federal Income Tax Credit (ITC). Another factor is the state’s net metering rules, which require utilities in the state to reimburse solar users for the power they put on the grid.
“The most important element, according to installers and program administrators, were volumetric reductions in incentives,” Lacey said. “Every time a certain number of megawatts was deployed, payments stepped down accordingly. That allowed the market to dictate incentive levels, instead of relying on lawmakers or an artificially imposed annual timeframe.” The reductions were staged in a way that allowed installers to reduce costs as more business came to them and the market matured.
The result, Lacey said, is the potential for the state to install more than 2.5 gigawatts of residential and commercial systems annually with no state incentives. However the fate of the ITC could impact that to a certain extent. If the 30 percent credit is not renewed it could cause a spike in solar array prices, which could slow growth.Tweet