Exemption from property tax Since 1980, the state government excluded solar installations as taxable improvements on a property. This has resulted in many counties seeing no tax benefit from solar farm installations, with some like
Kern County stating that they had lost $110 million in property taxes over a decade due to this policy. State legislators felt that the policy was necessary because otherwise the property taxes on solar farms would be four to seven times higher in California than neighboring states, and would thereby incentive all new development of solar to occur out-of-state.
Renewable portfolio standard California's
renewable portfolio standard (RPS) sets a minimum of renewable generation from load-serving entities in the state. The most recent RPS was set under senate bill 100 and went into effect January 1, 2019. SB 100 mandates that 60% of California's electricity will be generated by
renewable resources by 2030, and 100% will be generated by carbon-free sources by 2045. Much of this is expected to come from solar power. According to a report by the California Public Utilities Commission (CPUC), California failed to meet the 20% renewables by 2010 target. In 2010,
Southern California Edison produced 19.4% of its electricity from renewable sources,
Pacific Gas and Electric Company generated 17.7% of the electricity it sold from renewable sources, and
San Diego Gas & Electric generated 11.9% of its electricity from renewable sources. As of October 2020, California had 31,288 MW of solar and 5,830 MW of wind farms. California adopted
feed-in tariffs, a tool similar to what Europe has been using, to encourage the solar power industry. Proposals were raised aiming to create a small-scale solar market in California that brings the benefits of the German market, such as
distributed generation, which avoids the need for transmission because power is generated close to where it is used, and avoid the drawbacks such as excessively high payments that could become a burden on utility customers.
California Solar Initiative The California Solar Initiative is a 2006 initiative to install 3,000 MW of additional solar power by 2016. Included in it is the Million Solar Roof Initiative. In 2011, this goal was expanded to 12,000 MW by 2020. As part of Governor
Arnold Schwarzenegger's Million Solar Roofs Program, California has set a goal to create 1,940 megawatts of new, solar-produced electricity by 2016 – moving the state toward a cleaner energy future and helping lower the cost of solar systems for consumers. The California Solar Initiative has "a total budget of $2.167 billion between 2007 and 2016 and a goal to install approximately 1,940 MW of new solar generation capacity." According to the CPUC, homeowners, businesses, and local governments installed 158 MW of solar photovoltaics (PV) in 2008, doubling the 78 MW installed in 2007, giving California a cumulative total of 441 MW of distributed solar PV systems, the highest in the country. As of August 2016, 4,216 MW have been installed in 537,647 projects. The average cost of systems less than 10 kW is $5.33/watt and $4.38/watt for systems over 10 kW. Of these, 3,391 MW were rooftop solar in 2015. The CSI initially offered
cash incentives on solar PV systems of up to $2.50 per AC watt. These incentives, combined with federal tax incentives, could cover up to 50% of the total cost of a solar system. The incentive program was designed so that the incentives would reduce in steps based on the amount of solar installed in each of 6 categories. There are separate steps for residential and non-residential customers in the territories of each of the State's 3 investor-owned utilities. As of July 2012, the rebates range from $0.20 to $0.35 per AC watt for residential and commercial systems and from $0.70 to $1.10 for systems for non-profits and government entities. CSI provides more than $2 billion worth of incentives to customers for installing photovoltaic, and electricity displacing solar thermal systems in the three California Investor-Owned Utilities service territories. The program was authorized by the California Public Utilities Commission and by the
Senate Bill 1 (SB 1): • Decision (D.) 06-01-024, in collaboration with the California Energy Commission, with the goal of installing 3,000
MW of new solar facilities in California's homes and businesses by 2017. • On August 21, 2006, the Governor signed SB1, which directs the CPUC and the CEC to implement the CSI program consistent with specific requirements and budget limits set forth in legislation. Responsibility for administration of the CSI Program is shared by Investor-Owned Utilities: • Pacific Gas and Electric Company – PG&E customers; • Southern California Edison Company – SCE customers; • California Center for Sustainable Energy – SDG&E customers. Residential installation starts in early 2007 fell off sharply in SCE territory because of the disincentives inherent in SB1, requiring time-of-use (TOU) tariffs, with the result that homeowners who install panels may find their electric bill increasing rather than decreasing. The governor and legislature moved quickly to pass AB1714 (June 2007) to delay the implementation of this rule until 2009.
Net metering California's
net energy metering program incentivizes distributed solar generation and battery storage by compensating customers for excess energy they export to the electric grid. A consumer's excess solar generation is bought by the local utility at or below retail pricing when it is exported, allowing consumers to "store" their own generation in the grid to be used at any time. Net metering was first implemented in 1995 in the passing of Senate Bill (SB) 656, known now as NEM1. Out of 38 states evaluated in a rating of state net metering policy in 2007, California was one of five states to receive an A.
IREC best practices, based on experience, recommends no limits to net metering, individual or aggregate, and perpetual roll over of kWh credits. As California was rapidly approaching the 5% aggregate limit, a May 24, 2012, ruling by the CPUC clarified the calculation of the limit, and requested a report on the cost of net metering. California subsequently uncapped the net metering program. Typically states have raised or eliminated their aggregate limits before they were reached. By 2011, 16 states including California received an A for net metering. In 2013, Assembly Bill (AB) 327 mandated that a successor to the existing NEM1, NEM2, should be adopted by the CPUC. NEM2 went into effect in
SDG&E's service territory on June 29, 2016,
PG&E's service territory on December 15, 2016, and
SCE's service territory on July 1, 2017. One of NEM2's key objectives was to ensure continued growth of distributed solar by removing the 1,000kW limit on new systems. While NEM2 continued to compensate customers with full retail pricing, it also included three charges: a one-time interconnection fee, non-bypassable charges that fund low-income customers, energy efficiency programming and other energy programs, and a time-of-use (
TOU) rate. California's current net metering policy is outlined in the Net Billing Tariff, known as NEM3, which went into effect April 15th, 2023. The Tariff takes into account proposals from various parties, including a lookback study on NEM 2.0 and 1.0.
Mandatory solar power in new homes In March 2008,
Culver City established the first in the nation mandatory solar photovoltaic requirement, which requires an installation of 1 KW of solar photovoltaic power per of new or major remodeled commercial building area. In March 2013,
Lancaster, California became the first U.S. city to mandate the inclusion of solar panels on new homes, requiring that "every new housing development must average 1 kilowatt per house." Since January 1, 2014, California law requires all new buildings less than ten stories tall be "solar ready". In April 2016, San Francisco mandated that all new buildings less than ten stories tall include solar panels or solar water heating covering at least 15% of the roof, beginning January 1, 2017. In 2018, the State of California Building Standards Commission approved solar installation requirements for all new residential buildings with three stories or fewer. This requirement took effect in 2020.
Streamlined permitting California governor
Jerry Brown signed a streamlined permitting bill (AB 2188) for residential solar systems on September 22, 2014. AB 2188 has four major provisions designed to reduce red-tape associated with local solar permits and requires that, by the end of September 2015, all California cities and counties must "adopt an ordinance that creates an expedited, streamlined permitting process for residential rooftop solar energy systems of less than 10 kilowatts in size." Research and industry reports project the bill could reduce the cost of installing a typical residential solar system in the state by over $1,000.
Alameda County solar financing Using a 20-year property assessment known as
PACE financing, the city of
Berkeley had a successful pilot program from 2008 to 2009 as the first city in the country to allow residents to obtain solar power without any initial payment. In the plan, property owners paid as much in increased property taxes as they save in energy costs, allowing them to install the panels for free at no cost to the city. Thirty eight projects were installed for the pilot stage of the program. PACE financing has spread to 28 states, but is on hold in many due to objections by
Freddie Mac and
Fannie Mae, including in Berkeley (which has not continued the pilot as a result). Legislation has been introduced to require acceptance of PACE financing.
City of Los Angeles feed-in tariff The
City of Los Angeles Department of Water and Power initiated a program on January 11, 2013, to pay up to 17 cents/kWh for electricity generated by up to 100 MW of solar power in a
feed-in tariff program. 20 MW is reserved for small projects of less than 150 kW each. The program could be expanded to 150 MW in March. ==State challenges with solar power ==