Note: Funding is no longer available for residential systems that displace electricity or propane in any of the program service territories.  Additionally, funding has been exhausted for commercial/multifamily systems that displace electricity or propane in the service territories of SCE and PG&E.

AB 1470 of 2007 authorized the creation of a $350 million incentive program for solar water heating systems. Of the $350 million in total funding, $25 million is reserved for low-income incentives, $225 million is for systems that will displace natural gas water heaters, and $100 million is set aside for systems replacing electric water heaters. Before developing the program, however, the California Public Utilities Commission (CPUC) had to wait for results from a pilot solar water heating program administered by the Center for Sustainable Energy (CSE) in the San Diego area. After reviewing the positive results of the pilot program, the CPUC developed rules for the statewide program and the program administrators began accepting applications retroactively on May 1, 2010 for single-family residential systems installed after July 15, 2009. Rebate applications for multifamily residential and commercial customers have been accepted since June 2010. CPUC Decision 12-08-008 of August 2012 established separate incentive rates for single-family residential systems and commercial/multifamily systems, each significantly higher than the rates previously available.

Originally restricted to just solar water heaters, the prorgam was expanded by CPUC Decision 13-02-018 in February 2013 to include other solar thermal technologies, including solar process heating, solar cooling, and non-residential solar pool heating. 

The program is being administered by Pacific Gas & Electric (PG&E), Southern California Edison (SCE), Southern California Gas Company (SCGC) and CSE on behalf of San Diego Gas & Electric (SDG&E).  There are different incentive levels depending on whether the solar water heating system displaces electricity, natural gas, or propane. Incentives for systems with a capacity of 250 kW-thermal or less will be paid upfront based on the OG-300 estimated first year energy savings. Larger systems will receive 70 percent of the incentive upfront, with the remaining 30 percent paid after 12 consecutive months, based on actual metered energy savings. Note, CPUC Decision 13-02-018 replaced the 70/30 split with a performance-based incentive which will make quarterly payments for a 2-year period based on metered energy output. This change will not take effect, however, until the new CSI Thermal Handbook is approved.  

Similar to the PV incentives offered through the California Solar Initiative, the incentives offered through this program will step down four times as installation milestones are met. Steps will decline separately in each service territory and for the four general customer classes.

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