Energy Incentive Programs, California

Updated November 2009

Below you will find questions and answers regarding California's utility energy efficiency programs, including options for load management, demand response, and distributed energy resources, and information about state-sponsored energy efficiency programs.

Some of the following documents are available as Adobe Acrobat PDFs. Download Adobe Reader.

What public-purpose-funded energy efficiency programs are available in my state?

California's restructuring law provides funding for energy efficiency programs through a non-bypassable public goods charge. The California Public Utilities Commission (CPUC) approved energy efficiency funding of up to $784 million for 2009 and $3.1 billion for 2010 through 2012 (42% higher than the previous three-year plan). A portion of the budget is funded by the public goods charge with the remaining recovered through electric rates.

Public-purpose-funded energy efficiency programs are administered by the state's investor-owned utilities (IOUs), which include Pacific Gas and Electric (PG&E), Southern California Edison (SCE), Southern California Gas (SoCal Gas), and San Diego Gas and Electric (SDG&E).

Programs offered by more than one investor-owned utility include:

PG&E, SCE, SDG&E, and SoCal Gas as well as the Sacramento Municipal Utility District (SMUD) offer the Savings by Design program. The program provides incentives for energy efficiency measures in new construction and major renovations. It offers building owners and their design teams a range of services, including design assistance, owner incentives to help offset the costs of new energy-efficient buildings, and design team incentives to reward designers that meet ambitious energy efficiency targets. Contact the applicable utility in your region for further details.
SCE and SDG&E offer the Standard Performance Contract (SPC) Program, which provides financial incentives of $0.05 to $0.15 per first-year kWh saved to offset up to 50% of the capital cost of installing high-efficiency equipment or systems, including lighting, HVAC, and refrigeration upgrades, as well as more specialized process improvements and customized equipment replacements.
SCE, PG&E, and SDG&E offer standard rebates for upgrading or replacing equipment, including lighting, HVAC, boilers, water heaters, refrigerators, and others.
PG&E and SDG&E offer customized financial incentives for implementing energy efficiency projects for large businesses in existing buildings.
SCE and SDG&E allow third parties to bid for implementing energy efficiency programs. Selected bidders receive portions of the approved energy efficiency program budgets to develop and implement their own initiatives under the auspices of the utility programs.

PG&E offers the following additional programs:

The Advanced Lighting Technology Program for Federal Facilities provides tailored technical assistance to help Federal facilities implement state-of-the-art lighting efficiency measures. Through the program, PG&E provides a dedicated team to work with each individual participant to help identify potential measures and guide them through the implementation process. The program serves as an umbrella under which Federal customers can access the full suite of PG&E's energy efficiency, demand response, and distributed generation programs as well as its utility energy service contracts (UESCs).
The LED Street Light Program was launched in May 2009. The program currently applies only to customer-owned street lights billed at PG&E's non-metered LS-2 rate. Future plans include incentives for metered, customer-owned streetlights and other types of outdoor LED lighting.

SDG&E offers several programs, including:

The Energy Savings Bid Program provides incentives for electric or gas efficiency projects that save at least 500,000 kWh or 25,000 therms annually. The incentives range from $0.07 to $0.20 per kWh for electric measures and $0.80 per therm saved with gas projects.
The High Tech Rebates Program provides financial incentives for server virtualization projects.
The Tax-Exempt Customer Incentive Program provides technical assistance and financial incentives for large energy efficiency projects in existing buildings owned by tax-exempt organizations.

The SCE RCx program provides retro-commissioning services to large customers.

SoCal Gas offers the following natural gas efficiency programs:

The Commercial & Industrial Incentive Program provides incentives of up to $1 million per customer for gas efficiency projects with an energy savings of at least 200,000 therms per year.
The Express Efficiency Rebate Program offers up to $200,000 in rebates per year and covers many energy-efficient gas appliances, such as water heaters and boilers, and related efficiency improvements, such as insulation.
The Business Energy Efficiency Program (BEEP) offers up to 50% of the cost of high-efficiency equipment installed or $0.50 per therm saved, whichever is lower, capped at $1 million per project and $2 million per premise per year.
The Industrial End User Program offers free energy assessments to customers using 400,000 therms or more per year to help identify energy efficiency projects that may qualify for rebates of up to $1 million per project or up to $2 million per premise per year.

California's two largest municipal utilities, the Los Angeles Department of Water and Power (LADWP) and the Sacramento Municipal Utility District, each offer their own set of energy efficiency programs.

LADWP offers a number of business rebate and incentive programs for its non-residential customers, including Commercial Lighting Efficiency, Chiller Efficiency, New Construction, Small Business Direct Install (lighting), and the Custom Performance Program.
SMUD offers both customized and prescriptive incentives, which generally account for 30% of a project or up to $50,000 depending on the measure.
- The Express Incentives program provides rebates for qualified efficient lighting, air-conditioning, refrigeration, control systems, and motor-driven processes.
- The SMUD Retro-commissioning Program is fully committed, but a waiting list is in place in anticipation of future funding.
- SMUD also offers loans for efficient lighting, heating, and air-conditioning equipment. SMUD also participates in the Savings by Design Program for new office construction.

The California Energy Commission (CEC) Flex Your Power initiative maintains a database of California programs (searchable by zip code) that provide rebates and other forms of assistance for energy efficiency, load management, and distributed generation.

What utility energy efficiency programs are available to me?

In addition to the utility energy efficiency programs described in the previous section, many other municipal and public utilities offer programs. Several are listed below. For information about additional incentive programs offered by smaller utilities, visit the Database of State Incentives for Renewable Energy (DSIRE).

Alameda Municipal Power offers several energy efficiency incentive programs, including lighting rebates, commercial air-conditioning rebates, grants for energy-efficient new construction design, rebates for advanced technologies like LED lighting, and business energy audits.

Anaheim Public Utilities offers a number of business energy efficiency incentives, including lighting, HVAC, industrial process improvement, pre-qualified energy measures in new construction, free outdoor high-pressure sodium lights with sensors, and customized incentives for energy efficiency equipment not covered in other programs.

Burbank Water and Power (BWP) offers rebates to businesses for energy-efficient motors, HVAC, and cool roofs. BWP also offers free energy and water use audits and up to $2,000 in retrofit rebates via the Business Bucks Program to small accounts (electricity costs between approximately $100 and $3,000 per month)

Glendale Water and Power (GWP) offers a variety of incentives for retrofits and new construction projects for business customers whose monthly electric bill is greater than $3,000. Rebates are limited to 25% of installed cost and 100% of incremental cost and are not to exceed the value of saved energy over the life of the measures (maximum $100,000 per year per customer).

The City of Lompoc Utility Department's Commercial Lighting Program rebates up to 30% of the installation cost of more energy-efficient lighting.

The City of Palo Alto offers two programs for business customers:

The Commercial Advantage Program provides rebates for energy-efficient equipment upgrades, including lighting, boilers, water heating, HVAC, chillers, appliances, and custom measures.
The Solar Water Heating Program provides incentives ($75,000 maximum) based on the solar orientation factor and production rating of the installed solar water heater.

Riverside Public Utilities offers several programs:

The Air-Conditioning Incentive rebates $100 per ton for ENERGY STAR® air-conditioning units, including heat pumps, package air-conditioning, and chiller systems.
The Energy Efficiency Technology Grant Program provides up to 100% of project costs ($100,000 maximum) for research, development, and effective use of innovative energy technologies unique to the customer's business or industry-specific processes. All projects or uses of grant funds must comply with the California Public Utilities Code Section 385 related to use of public benefits funds.
The Efficient Lighting program provides incentives of $0.05 per kWh of the calculated energy savings for one year (up to 25% of equipment cost).
The Efficient Motors program provides rebates of $35 to $650 ($25,000 maximum per customer) for replacing older inefficient motors with the NEMA premium models.
The Energy Efficiency Construction Incentive Program covers up to 50% of the owner's cost for energy efficiency measures ($150,000 maximum) for new construction or most major retrofit projects. The program is subject to fund availability.
The Energy Management Systems Assistance Program offsets 50% of the costs ($25,000 maximum) of upgrading energy management systems and equipment.

Silicon Valley Power (SVP) offers a number of rebates (capped at a $750,000 per customer per year) to its business customers for energy efficiency measures. Rebate programs include HVAC, data center optimization, commercial washing machines, food service equipment, motors and variable frequency drives, energy-efficient building design, new construction, and design team/customer-directed measures. In addition, the SVP Energy Innovation Program offers grants ($250,000 per customer; $500,000 total for the program) for innovative energy efficiency technologies, applications, or solutions.

What load management/demand response options are available to me?

CPUC approved nearly $300 million for utility demand response programs for 2009 through 2011. Several demand response programs are offered statewide by all three of California's electric IOUs:

The Demand Bidding Program (DBP) offered by PG&E, SCE, and SDG&E (PDF 58 KB) provides incentive payments of up to $0.50 per kWh for day-ahead curtailment commitments and $0.60 per kWh for day-of commitments. Participants place bids online the day before the event for the amount of power they are willing to reduce, in increments of two hours or more. DBP events usually take place from 12:00 p.m. to 8:00 p.m. and can occur on any weekday excluding holidays.
The Critical Peak Pricing (CPP) program offered by PGE, SCE, and SDG&E provides lower electricity rates in return for setting a rate three to five times higher than the regular rate on up to 12 critical peak afternoons during the summer. Customers are notified of CPP days on a day-ahead basis. A bill protection option is available that prevents participants from paying more than they would have under their previous rate during their first year of CPP participation. Participants may also opt for technical assistance to help take better advantage of the program and receive cash incentives for doing so.
The Base Interruptible Program (BIP) offered by PG&E, SCE, and SDG&E allows participants to nominate a level of firm service (the amount of electricity necessary to meet operational requirements during an interruption) that is below their historic average maximum demand. They receive a monthly incentive payment based on the size of the remaining, curtailable portion of their load in return for committing to reduce to the firm level when called upon by the utility. The incentives are typically about $7 per committed kW per month for curtailment of 15% of load when called by the utility with 30-minutes notice. There is a minimum drop of 100 kW per event. PG&E and SDG&E offer a three-hour notice in exchange for a lower incentive option ($3 per kW). Curtailment requests cannot exceed one per day (of up to four hours), 10 per month, or 120 hours per year (90 hours for the lower incentive options). Penalties apply for customers that fail to reduce load as requested (the amount depends on the utility and the incentive option). All three utilities have now contracted with numerous third-party aggregators that recruit customers to participate in BIP and manage their participation process. By serving as an intermediary, the aggregators can handle many of the details on behalf of customers and help develop load reduction strategies. The aggregators may also offer innovative program features (i.e., by assuming the risk of non-compliance penalties or by allowing customers to participate who might otherwise be too small to enroll directly in the utility's program). As of August 2009, SDG&E restricted new participants in the program, though this may change in 2010.
Under the Capacity Bidding Program (CBP), PG&E, SCE, and SDG&E participants receive a monthly incentive to reduce energy use to a pre-determined amount once a CBP event is called by the utility. Customers have the option to directly enroll or go through a third-party aggregator to join.

Some demand response programs are not common to all the California utilities, including:

PG&E offers its cafeteria-style PeakChoice Program open to any customer that can provide a load reduction of at least 10 kW. The program offers participants a high degree of flexibility in customizing the terms of participation.
PG&E and SCE offer the Optional Binding Mandatory Curtailment Program, which provides customers exemption from rotating outages if they can reduce their circuit load during Stage 3 emergencies. Participants must reduce their power consumption by 5% to 15% for the duration of every rotating outage event. The penalty for failure to reduce as requested is $6.00 per kWh for energy use that exceeds an established baseline.
SCE and SDG&E offer summer air-conditioner cycling programs to their commercial customers through the SCE Summer Discount Plan and SDG&E Summer Saver program. These programs provide a credit on participant summer season electric bills in return for allowing the utility to cycle air-conditioners when needed during the months of May through September. Customers can choose among several options regarding the frequency and duration of curtailments, each with corresponding remuneration levels.
SCE offers the Scheduled Load Reduction Program to qualified bundled-service customers with average monthly demand of 100 kW or more. The program provides a $0.10 per kWh on-bill credit for reducing load on prescheduled days from June 1 through September 30.
The SCE Technical Assistance and Technology Incentives (TA&TI) program provides eligible business customers free demand response site assessments and financial incentives for installing eligible demand response equipment that reduces electricity usage during periods of peak demand. This program is designed to provide increased flexibility to facilitate participation in other demand response incentive programs.

Contact your electric utility for further details and information on additional demand response programs not covered here (PG&E, SCE, or SDG&E).

The California Energy Commission's Enhanced Automation (EA) program assists customers in the design and optimization of control systems to help manage loads and participate in demand response programs in the state.

What distributed energy resource options are available to me?

The Database of State Incentives for Renewable Energy provides detailed information on a large number of programs that provide incentives for renewable distributed generation in California.

The California Solar Initiative (CSI) offers incentives for photovoltaic (PV) systems. All electric customers of PG&E, SCE, and SDG&E are eligible. Under the CSI, financial incentives decline in a series of 10 steps based on the cumulative installed PV capacity. Currently, incentives for non-residential customers are at step six for PG&E and step five for SCE and SDG&E. Further declines in incentive rates are likely to occur in the not-too-distant future. Federal customers considering a PV system should act quickly to secure an incentive at the current levels.

Rebates are available for distributed generation equipment from wind turbines (30 kW minimum capacity) and fuel cells through the Self-Generation Incentive Program (SGIP) administered by PG&E, SCE, SoCal Gas, SDG&E, and the San Diego Regional Energy Office. Incentives and eligibility requirements vary depending on the distributed generation technology. Systems can be up to 5 MW, though only the first MW of capacity is eligible for incentive payments. For program specifics, contact the applicable administrator for your region (PG&E, SCE, SoCal Gas, SDG&E, or the Center for Sustainable Energy).

The LADWP Commercial Solar Power Incentive Program pays a one-time up-front payment per kWh based on the system's expected production over 20 years. Systems can be up to 5 MW, though only the first MW of capacity is eligible for incentive payments. The maximum incentive is 50% of the system cost.

SMUD offers two types of incentives for customers that install and produce electricity with a PV system. The one-time incentive of $1.10 per watt (up to 1 MW) is based on the system's expected performance. The Performance Based Incentive (PBI) pays $0.17 per kWh produced for a five-year period and $0.11 per kWh for the 10-year option. Other PBI options are available for systems larger than 1 MW.

Federal customers may also be interested in the state's Emerging Renewables Program, which provides rebates for fuel cells and small wind turbines. Eligible renewable energy systems must be permanently interconnected to the electrical distribution grid of the customer's serving utility and cannot produce more than 100% of the site's historical or current electricity needs. Participants must receive electrical distribution service from PG&E, SCE, SDG&E, or Southern California Water Company. Fuel cells less than 30 kW using renewable fuel qualify for $3.00 per W and wind turbines with a rated output of 50 kW or less may qualify for $2.50 per watt for the first 7.5 kW and $1.50 per watt for capacity above 7.5 kW and less than 30 kW.

CPUC recently approved feed-in tariffs that allow customers with on-site renewable electricity generation systems (up to 1.5 MW in size) to sell the output to their utility at a standard price. The feed-in tariff prices are based on the state's Market Price Referent (MPR), which varies according to the year of commercial operation and the contract term.

A number of utility-funded rebates are also available from smaller utilities throughout the state. Rebates for non-residential PV installations are typically based on two options. Option one is the Expected Performance Based Incentive (EPBI), also called a Standard Rebate, which is an up-front payment limited to smaller installations (up to 30 kW or in some cases up to 100 kW). Option two is a Performance Based Incentive (PBI) for installations between 30 kW (or in some cases 100 kW) and 1 MW. The PBI pays out over the first five years of the system's life on a per kWh basis.

Anaheim's Solar Advantage Program offers EPBI for installations up to 30 kW and PBI for installations between 30 kW and 1 MW. For fiscal year 2009 through 2010 the EBPI incentive is $2.60 per watt and the PBI incentive is $0.39 per kWh for the first five years of production.
Burbank Water and Power (BWP) pays $3.00 per watt under the EPBI (systems up to 30 kW) and offers an additional $0.50 per watt if the customer assigns the associated renewable energy credits (RECs) to BWP. Larger installations under the PBI are incentivized at $0.414 per kWh or $0.483 if the customer assigns the earned RECs to BWP. The PBI option is also available for installations under 30 kW.
The City of Palo Alto's PV Partner Program pays a standard rebate of $3.75 per watt to public entities for smaller systems up to 100 kW, and a PBI of $0.47 per kWh for installations of 100 kW up to 1 MW.

In California, distributed generation systems of less than 1 MW that are net-metered and eligible for CPUC or California Energy Commission incentives for being "clean" and "super clean" are fully exempt from any utility exit surcharge.

Are there energy efficiency programs sponsored by the state government?

There are energy efficiency opportunities for Federal customers through the Public Interest Energy Research (PIER) program, which is administered by the California Energy Commission and focuses on research, development, and demonstration programs. Federal agencies may propose their own programs to PIER for funding or may apply for incentives, technical assistance, and other aid through programs already established.

What additional opportunities are available to me?

Federal customers whose utilities have area-wide contracts through the General Services Administration (GSA) (e.g., PG&E, SDG&E, SCE, SoCal Gas, and City of Alameda) may be able to take advantage of third-party financed energy efficiency projects called utility energy service contracts. Information is available through the GSA Energy Center of Expertise Library. Federal facilities should contact their account executive to determine the level of each utility's participation.

NOTE: Energy efficiency funds and demand response programs are updated at least annually. Please contact the FEMP webmaster if changes are needed between updates.

Printable Version