ARTICLE 1. Solar Energy Systems [2851. - 2854.6.]

Cal. Public Utilities Code - PUC 1.

in effect

Cal. Public Utilities Code - PUC § 2851. Section 2851.

(a) In implementing the California Solar Initiative, the commission shall do all of the following: (1) (A) The commission shall authorize the award of monetary incentives for up to the first megawatt of alternating current generated by solar energy systems that meet the eligibility criteria established by the Energy Commission pursuant to Chapter 8.8 (commencing with Section 25780) of Division 15 of the Public Resources Code. The commission shall determine the eligibility of a solar energy system, as defined in Section 25781 of the Public Resources Code, to receive monetary incentives until the time the Energy Commission establishes eligibility criteria pursuant to Section 25782. Monetary incentives shall not be awarded for solar energy systems that do not meet the eligibility criteria. The incentive level authorized by the commission shall decline each year following implementation of the California Solar Initiative, at a rate of no less than an average of 7 percent per year, and, except as provided in subparagraph (B), shall be zero as of December 31, 2016. The commission shall adopt and publish a schedule of declining incentive levels no less than 30 days in advance of the first decline in incentive levels. The commission may develop incentives based upon the output of electricity from the system, provided those incentives are consistent with the declining incentive levels of this paragraph and the incentives apply to only the first megawatt of electricity generated by the system. (B) The incentive level for the installation of a solar energy system pursuant to Section 2852 shall be zero as of December 31, 2021. (2) The commission shall adopt a performance-based incentive program so that by January 1, 2008, 100 percent of incentives for solar energy systems of 100 kilowatts or greater and at least 50 percent of incentives for solar energy systems of 30 kilowatts or greater are earned based on the actual electrical output of the solar energy systems. The commission shall encourage, and may require, performance-based incentives for solar energy systems of less than 30 kilowatts. Performance-based incentives shall decline at a rate of no less than an average of 7 percent per year. In developing the performance-based incentives, the commission may: (A) Apply performance-based incentives only to customer classes designated by the commission. (B) Design the performance-based incentives so that customers may receive a higher level of incentives than under incentives based on installed electrical capacity. (C) Develop financing options that help offset the installation costs of the solar energy system, provided that this financing is ultimately repaid in full by the consumer or through the application of the performance-based rebates. (3) By January 1, 2008, the commission, in consultation with the Energy Commission, shall require reasonable and cost-effective energy efficiency improvements in existing buildings as a condition of providing incentives for eligible solar energy systems, with appropriate exemptions or limitations to accommodate the limited financial resources of low-income residential housing. (4) Notwithstanding subdivision (g) of Section 2827, the commission may develop a time-variant tariff that creates the maximum incentive for ratepayers to install solar energy systems so that the system’s peak electricity production coincides with California’s peak electricity demands and that ensures that ratepayers receive due value for their contribution to the purchase of solar energy systems and customers with solar energy systems continue to have an incentive to use electricity efficiently. In developing the time-variant tariff, the commission may exclude customers participating in the tariff from the rate cap for residential customers for existing baseline quantities or usage by those customers of up to 130 percent of existing baseline quantities, as required by Section 739.9. Nothing in this paragraph authorizes the commission to require time-variant pricing for ratepayers without a solar energy system. (b) Notwithstanding subdivision (a), in implementing the California Solar Initiative, the commission may authorize the award of monetary incentives for solar thermal and solar water heating devices, in a total amount up to one hundred million eight hundred thousand dollars ($100,800,000). (c) (1) In implementing the California Solar Initiative, the commission shall not allocate more than fifty million dollars ($50,000,000) to research, development, and demonstration that explores solar technologies and other distributed generation technologies that employ or could employ solar energy for generation or storage of electricity or to offset natural gas usage. Any program that allocates additional moneys to research, development, and demonstration shall be developed in collaboration with the Energy Commission to ensure there is no duplication of efforts, and adopted by the commission through a rulemaking or other appropriate public proceeding. Any grant awarded by the commission for research, development, and demonstration shall be approved by the full commission at a public meeting. This subdivision does not prohibit the commission from continuing to allocate moneys to research, development, and demonstration pursuant to the self-generation incentive program for distributed generation resources originally established pursuant to Chapter 329 of the Statutes of 2000, as modified pursuant to Section 379.6. (2) The Legislature finds and declares that a program that provides a stable source of monetary incentives for eligible solar energy systems will encourage private investment sufficient to make solar technologies cost effective. (d) (1) The commission shall not impose any charge upon the consumption of natural gas, or upon natural gas ratepayers, to fund the California Solar Initiative. (2) Notwithstanding any other provision of law, any charge imposed to fund the program adopted and implemented pursuant to this section shall be imposed upon all customers not participating in the California Alternate Rates for Energy (CARE) or family electric rate assistance (FERA) programs, including those residential customers subject to the rate limitation specified in Section 739.9 for existing baseline quantities or usage up to 130 percent of existing baseline quantities of electricity. (3) The costs of the program adopted and implemented pursuant to this section shall not be recovered from customers participating in the California Alternate Rates for Energy or CARE program established pursuant to Section 739.1, except to the extent that program costs are recovered out of the nonbypassable system benefits charge authorized pursuant to Section 399.8. (e) Except as provided in subdivision (f), in implementing the California Solar Initiative, the commission shall ensure that the total cost over the duration of the program does not exceed three billion five hundred fifty million eight hundred thousand dollars ($3,550,800,000). Except as provided in subdivision (f), financial components of the California Solar Initiative shall consist of the following: (1) Programs under the supervision of the commission funded by charges collected from customers of San Diego Gas and Electric Company, Southern California Edison Company, and Pacific Gas and Electric Company. Except as provided in subdivision (f), the total cost over the duration of these programs shall not exceed two billion three hundred sixty-six million eight hundred thousand dollars ($2,366,800,000) and includes moneys collected directly into a tracking account for support of the California Solar Initiative. (2) Programs adopted, implemented, and financed in the amount of seven hundred eighty-four million dollars ($784,000,000), by charges collected by local publicly owned electric utilities pursuant to Section 2854. Nothing in this subdivision shall give the commission power and jurisdiction with respect to a local publicly owned electric utility or its customers. (3) (A) Programs for the installation of solar energy systems on new construction (New Solar Homes Partnership Program), administered by the Energy Commission, and funded by charges in the amount of four hundred million dollars ($400,000,000), collected from customers of San Diego Gas and Electric Company, Southern California Edison Company, and Pacific Gas and Electric Company. If the commission is notified by the Energy Commission that funding available pursuant to Section 25751 of the Public Resources Code for the New Solar Homes Partnership Program and any other funding for the purposes of this paragraph have been exhausted, the commission may require an electrical corporation to continue administration of the program pursuant to the guidelines established for the program by the Energy Commission, until the funding limit authorized by this paragraph has been reached. The commission may determine whether a third party, including the Energy Commission, should administer the utility’s continuation of the New Solar Homes Partnership Program. The commission, in consultation with the Energy Commission, shall supervise the administration of the continuation of the New Solar Homes Partnership Program by an electrical corporation or third-party administrator. After the exhaustion of funds, the Energy Commission shall notify the Joint Legislative Budget Committee 30 days prior to the continuation of the program. This subparagraph shall become inoperative on June 1, 2018. (B) If the commission requires a continuation of the program pursuant to subparagraph (A), any funding made available pursuant to the continuation program shall be encumbered through the issuance of rebate reservations by no later than June 1, 2018, and disbursed by no later than December 31, 2021. (4) The changes made to this subdivision by Chapter 39 of the Statutes of 2012 do not authorize the levy of a charge or any increase in the amount collected pursuant to any existing charge, nor do the changes add to, or detract from, the commission’s existing authority to levy or increase charges. (f) Upon the expenditure or reservation in any electrical corporation’s service territory of the amount specified in paragraph (1) of subdivision (e) for low-income residential housing programs pursuant to subdivision (c) of Section 2852, the commission shall authorize the continued collection of the charge for the purposes of Section 2852. The commission shall ensure that the total amount collected pursuant to this subdivision does not exceed one hundred eight million dollars ($108,000,000). Upon approval by the commission, an electrical corporation may use amounts collected pursuant to subdivision (e) for purposes of funding the general market portion of the California Solar Initiative, that remain unspent and unencumbered after December 31, 2016, to reduce the electrical corporation’s portion of the total amount collected pursuant to this subdivision.

Cal. Public Utilities Code - PUC § 2851.1. Section 2851.1.

(a) As used in this section,“discount rate” means a financial mechanism that provides a given amount of interest as an offset to the loss of the time value of money on solar projects that receive performance-based incentives under Section 2851. (b) Before collecting additional ratepayer funds to fund program shortfalls identified for incentive step levels 8, 9, and 10 for nonresidential solar photovoltaic systems, the commission shall first allocate interest accumulated from customer collections and, for the remainder of the shortfall, increase collections from customers of San Diego Gas and Electric Company, Southern California Edison Company, and Pacific Gas and Electric Company for programs described in paragraph (1) of subdivision (e) of Section 2851. (c) The discount rate shall be set at 4 percent, unless the commission determines the rate should be reduced.

Cal. Public Utilities Code - PUC § 2851.5. Section 2851.5.

(a) A school district or community college district may request an extension of a reservation expiration date for monetary incentives for a solar energy system. The commission may grant a maximum of three extensions of 180 calendar days for each extension. (b) An extension request pursuant to subdivision (a) shall be made in writing, submitted to the program administrators, and shall include a written explanation of the need for the extension and the amount of additional time needed. In describing the need for the time extension request, the school district or community college district shall provide information on the circumstances, that are beyond the control of the district, that prevent the solar energy system from being installed as previously described in the initial reservation request. A failure to submit the incentive claim form package by the original or extended reservation expiration date shall result in the cancellation of the request. (c) An approval of a request for a change in the reservation expiration date for monetary incentives for a solar energy system shall not modify any other condition of a reservation for incentives.

Cal. Public Utilities Code - PUC § 2852. Section 2852.

(a) As used in this section, the following terms have the following meanings: (1) “Affordable housing cost,” “affordable rent,” and “lower income households” have the same meanings as in those set forth in Chapter 2 (commencing with Section 50050) of Part 1 of Division 31 of the Health and Safety Code. (2) “California Solar Initiative” means the program providing ratepayer-funded incentives for eligible solar energy systems adopted by the Public Utilities Commission in Decision 05-12-044 and Decision 06-01-024. (3) “Low-income residential housing” means any of the following: (A) A multifamily residential complex financed with low-income housing tax credits, tax-exempt mortgage revenue bonds, general obligation bonds, or local, state, or federal loans or grants, and for which either of the following applies: (i) The rents of the occupants who are lower income households do not exceed those prescribed by deed restrictions or regulatory agreements pursuant to the terms of the financing or financial assistance. (ii) The affordable units have been or will be initially sold at an affordable housing cost to a lower income household and those units are subject to a resale restriction or equity sharing agreement pursuant to the terms of the financing or financial assistance. (B) A multifamily residential complex in which at least 20 percent of the total housing units are sold or rented to lower income households and either of the following applies: (i) The rental housing units targeted for lower income households are subject to a deed restriction or affordability covenant with a public entity or nonprofit housing provider organized under Section 501(c)(3) of the Internal Revenue Code that has as its stated purpose in its articles of incorporation on file with the office of the Secretary of State to provide affordable housing to lower income households that ensures that the units will be available at an affordable rent for a period of at least 30 years. (ii) The housing units have been or will be initially sold at an affordable cost to a lower income household and those units are subject to a resale restriction or equity sharing agreement, for which the homeowner does not receive a greater share of equity than described in paragraph (2) of subdivision (c) of Section 65915 of the Government Code, with a public entity or nonprofit housing provider organized under Section 501(c)(3) of the Internal Revenue Code that has as its stated purpose in its articles of incorporation on file with the office of the Secretary of State to provide affordable housing to lower income households. (C) An individual residence sold at an affordable housing cost to a lower income household that is subject to a resale restriction or equity sharing agreement, for which the homeowner does not receive a greater share of equity than described in paragraph (2) of subdivision (c) of Section 65915 of the Government Code, with a public entity or nonprofit housing provider organized under Section 501(c)(3) of the Internal Revenue Code that has as its stated purpose in its articles of incorporation on file with the office of the Secretary of State to provide affordable housing to lower income households. (4) “Solar energy system” means a solar energy device that has the primary purpose of providing for the collection and distribution of solar energy for the generation of electricity, that produces at least one kilowatt, and produces not more than five megawatts, alternating current rated peak electricity, and that meets or exceeds the eligibility criteria established by the commission or the Energy Commission. (b) In establishing the California Solar Initiative, no moneys shall be diverted from any existing programs for low-income ratepayers, or from cost-effective energy efficiency or demand response programs. (c) (1) The commission shall ensure that not less than 10 percent of the funds for the California Solar Initiative, as specified in subdivision (e) of, or moneys collected pursuant to subdivision (f) of, Section 2851, are utilized for the installation of solar energy systems on low-income residential housing. Notwithstanding any other law, the commission may modify the monetary incentives made available pursuant to the California Solar Initiative to accommodate the limited financial resources of low-income residential housing. (2) The commission may incorporate a revolving loan or loan guarantee program into the California Solar Initiative for low-income residential housing. All loans outstanding as of January 1, 2022, shall continue to be repaid consistent with the terms and conditions of the program adopted and implemented by the commission pursuant to this subdivision, until repaid in full. (3) All moneys set aside for the purpose of funding the installation of solar energy systems on low-income residential housing that are unexpended and unencumbered on January 1, 2022, and all moneys thereafter repaid pursuant to paragraph (2), except to the extent those moneys are encumbered pursuant to this section, shall be utilized to augment existing cost-effective energy efficiency measures in low-income residential housing that benefit ratepayers. (d) In supervising a program implementing the California Solar Initiative pursuant to this section, the commission shall ensure that the program does all of the following: (1) Is designed to maximize the overall benefit to ratepayers. (2) Requires participants who receive monetary incentives to enroll in the Energy Savings Assistance Program established pursuant to Section 382, if eligible. (3) Provides job training and employment opportunities in the solar energy and energy efficiency sectors of the economy.

Cal. Public Utilities Code - PUC § 2854. Section 2854.

(a) In order to further the state goal of encouraging the installation of 3,000 megawatts of photovoltaic solar energy in California within 10 years, the governing body of a local publicly owned electric utility that sells electricity at retail, shall adopt, implement, and finance a solar initiative program, funded in accordance with subdivision (b), for the purpose of investing in, and encouraging the increased installation of, residential and commercial solar energy systems. (b) On or before January 1, 2008, a local publicly owned electric utility shall offer monetary incentives for the installation of solar energy systems of at least two dollars and eighty cents ($2.80) per installed watt, or for the electricity produced by the solar energy system, measured in kilowatthours, as determined by the governing board of a local publicly owned electric utility, for photovoltaic solar energy systems. The incentive level shall decline each year thereafter at a rate of no less than an average of 7 percent per year. (c) A local publicly owned electric utility shall initiate a public proceeding to fund a solar energy program to adequately support the goal of installing 3,000 megawatts of photovoltaic solar energy in California. The proceeding shall determine what additional funding, if any, is necessary to provide the incentives pursuant to subdivision (b). The public proceeding shall be completed and the comprehensive solar energy program established by January 1, 2008. (d) The solar energy program of a local publicly owned electric utility shall be consistent with all of the following: (1) That a solar energy system receiving monetary incentives comply with the eligibility criteria, design, installation, and electrical output standards or incentives established by the Energy Commission pursuant to Section 25782 of the Public Resources Code. (2) That solar energy systems receiving monetary incentives are intended primarily to offset part or all of the consumer’s own electricity demand. (3) That all components in the solar energy system are new and unused, and have not previously been placed in service in any other location or for any other application. (4) That the solar energy system has a warranty of not less than 10 years to protect against defects and undue degradation of electrical generation output. (5) That the solar energy system be located on the same premises of the end-use consumer where the consumer’s own electricity demand is located. (6) That the solar energy system be connected to the local publicly owned electric utility’s electrical distribution system within the state. (7) That the solar energy system has meters or other devices in place to monitor and measure the system’s performance and the quantity of electricity generated by the system. (8) That the solar energy system be installed in conformance with the manufacturer’s specifications and in compliance with all applicable electrical and building code standards. (e) In establishing the program required by this section, no moneys shall be diverted from any existing programs for low-income ratepayers, or from cost-effective energy efficiency or demand response programs. (f) The statewide expenditures for solar programs adopted, implemented, and financed by local publicly owned electric utilities shall be seven hundred eighty-four million dollars ($784,000,000). The expenditure level for each local publicly owned electric utility shall be based on that utility’s percentage of the total statewide load served by all local publicly owned electric utilities. Expenditures by a local publicly owned electric utility may be less than the utility’s cap amount, provided that funding is adequate to provide the incentives required by subdivisions (a) and (b).

Cal. Public Utilities Code - PUC § 2854.5. Section 2854.5.

Notwithstanding paragraphs (2) and (5) of subdivision (d) of Section 2854, a local publicly owned electric utility may adopt, implement, and finance a solar initiative program otherwise in accordance with that section, using monetary incentives authorized by subdivision (b) of Section 2854, to residential and business consumers where consumers offset part or all of their electricity demand with electricity generated by a solar energy system not located on the premises of the consumer, if all of the following requirements are met: (a) The solar energy system meets all of the following conditions: (1) It is located within the service territory of the local publicly owned electric utility. (2) It has a capacity of no more than five megawatts. (3) It is interconnected to the local publicly owned electric utility’s system at the distribution level. (b) The local publicly owned electric utility meets all of the following conditions: (1) It provides monetary incentives authorized by Section 2854 for not more than the first megawatt of generating capacity of each solar energy system. (2) It has contracted to purchase the total electricity produced by the solar energy system or owns the solar energy system. (3) It provides no greater incentive per watt for the solar energy system than provided for by systems that participate in the applicable solar initiative program established under Section 2854. (4) It has received approval for the solar energy system from its governing board at a publicly noticed and held meeting. (c) The total megawatt capacity of solar energy systems eligible for a local publicly owned electric utility program under this section is both of the following: (1) Not more than the total megawatt capacity of the combined residential and commercial solar energy systems installed in the service area of the local publicly owned electric utility after July 1, 2010, that participate in the applicable solar initiative programs established under Section 2854. (2) Not more than 20 percent of the proportionate amount for the local publicly owned electric utility of the overall 3,000 megawatt state goal set forth in Section 2854, based on the percentage of the total statewide load served by that entity.

Cal. Public Utilities Code - PUC § 2854.6. Section 2854.6.

(a) On or before July 1, 2019, the commission shall develop standardized inputs and assumptions to be used in the calculation and presentation of electric utility bill savings to a consumer that can be expected by using a solar energy system by vendors, installers, or financing entities, and the commission and each electrical corporation shall post these standardized inputs and assumptions on their Internet Web sites. (b) For purposes of this section, “solar energy system” means a solar energy device to be installed on a residential building that has the primary purpose of providing for the collection and distribution of solar energy for the generation of electricity, that produces at least one kW, and not more than five MW, alternating current rated peak electricity, and that meets or exceeds the eligibility criteria established pursuant to Section 25782 of the Public Resources Code.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026