California Solar Series: Los Angeles
TheCalifornia Solar Initiative (CSI) mandated four years ago that allinvestor-owned utilities in the state must offer a solar rebate, and in2008 began requiring municipal utilities to do so as well. As aresult, Los Angeles County residents have numerous solar rebates andincentives available, depending on electric utility. In the thirdinstallment of our California Solar Series, GetSolar guides you throughthem.
Because the Los Angeles Department of Water & Power (LADWP)offers a particularly complex incentive, we’ll be dividing our LosAngeles solar coverage into two parts. Part one will focus on theSouthern California Edison (SCE) and LADWP incentives, while parttwo—which will be posted 1/26/10—will discuss the incentives put forthby the city utilities of Vernon, Azusa, Pasadena, Glendale and Burbank.
EPBB vs. PBI
To start, it’s crucial to understand the difference between the twostandard types of rebates utilities in California typically offer:Expected Performance-Based-Buy-down (EPBB) and Performance-BasedIncentive (PBI). An EPBB is issued in the form of a one-time, lump-sum payment. A PBIis paid out monthly over five years: though the rate at which it paysout is locked in at the time of application approval, the actual amountyou receive will vary as your solar array’s electrical output variesover time. Systems under 30 kw may apply for either the PBI or theEPBB, but systems greater than 30 kw can only choose the PBI. Refer toour guide to the CSI for a thorough breakdown of these incentives.
Southern California Edison
SCE is one of the three public utilities in the California Solar Initiative. Alongwith Pacific Gas & Electric (PG&E) and San Diego Gas &Electric (SDG&E), SCE offers steadily declining EPBB and PBIrebates that are based on the projected output of your solar energysystem as well as on the cumulative amount of solar plugged into theutility’s electrical grid at the time of your application. At the timeof writing, the EPBB rate for SCE is $1.90/watt for residential customers and $1.55/watt for commercial customers; the PBI rate is $0.26/kWh for residential and $0.22/kWh for commercial.
Los Angeles Department of Water & Power
Whether it’s an attempt to atone for its smog-inducing days of yoreor a belief in the ultimate profitability of solar, the LADWP boastsone of the most ambitious Renewable Portfolio Standards in the state,gunning for a lofty 35% by 2020. This target includes the LADWP’s objective of generating 10% of its energy through solar, a plan it calls Solar LA. The key to realizing such a goal lies in the LADWP Solar Photovoltaic Incentive Program, which is roughly modeled after the CSI, and even more complex—although boasting equal, if not higher, rewards.
The program is composed of ten declining “steps”, in which therebate rate available to a customer falls as the number of MW of solarPV connected to the LADWP grid rises by certain increments. Onlysolar photovoltaic systems between 1 kW and 1 MW in installed capacityare eligible for the rebate, which will cover up to 75 percent ofresidential solar installation costs and up to 50 percent of commercialsolar installation costs. The rebate will be delivered to you in aone-time payment after your solar system has been installed, inspectedand approved, and is calculated in the following manner:
Incentive amount = estimated first-year energyproduction x 20 years* x 0.9 (system degradation factor) x currentincentive rate (in $/kWh)
*or term of solar equipment lease
Basically, the incentive amount is based on the expected electricaloutput of the system for the first twenty years of its life. LADWPprefers predicted output to be calculated with the National RenewableEnergy Lab’s PVWatts program. It’s a tool that requires some experience and training to use properly, so you may want to find a solar installer before doing anything else.
Here’s an example we’ve directly taken from the LADWP Solar Programguidelines booklet, although we’ve updated the incentive rate, federaltax credit amount—which is no longer capped at $2,000 for residentialsolar installations—and per-watt cost of solar, which in California nowaverages out at $8/watt or lower rather than $8.50/watt.
- System size: 3.64 kW
- Calculated PV Watts first-year output: 5,536 kWh
- LADWP rebate: 5,536 kWh/year x 20 years (x 0.9 de-rate factor/year) x $0.12/kWh= $11,957.76
- Assumed installed cost (gross): 3,640 watts x $8/watt = $29,120
- Federal tax credit: $29,120 x 30% = $8,736
Thus, your net cost would be $8,426.24.
- $29,120 – $11,957.76 LADWP rebate – $8,736 federal tax credit= $8,426.24
This amounts to a savings of $20,384, or 71 percent, onyour solar installation! However, because the LADWP solar program dropsits incentive rate down to $0.11/kWh after it meets its Step 3 volumetarget, you don’t want to wait too long if you’re considering solar.
Questions? Clarifications? Don’t hesitate to post them here.
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