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Energy Incentive Programs, California

Updated December 2011

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 (PGC). The California Public Utilities Commission approved energy efficiency funding of $3.1 billion for 2010 through 2012. A portion of the budget is funded by the PGC, with the rest is to be recovered through electric rates.

Public-purpose-funded energy efficiency programs are administered by the state's investor-owned utilities (IOUs): 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:

• The Savings by Design program, offered by PG&E, SCE, SDG&E and SoCal Gas as well as the Sacramento Municipal Utility District (SMUD), provides incentives for integrating energy efficiency measures into new construction and major renovations. The program offers building owners and their design teams a range of services, including design assistance and Owner's Incentives (up to $500,000 or 50% of project costs, whichever is less) to help offset the costs of new energy-efficient buildings, and design team incentives (up to $50,000, plus an extra $5,000 for early collaboration) to reward designers who meet ambitious energy efficiency targets. Owner Incentives include a separate 10% bonus for each of the following: LEED certification, incorporation of end-use monitoring and/or use of enhanced commissioning.

• Under the Statewide Customized Offering for Business, PG&E, SCE and SDG&E offer financial incentives for efficient lighting, air conditioning, refrigeration and natural gas equipment as well as for controls, building shell retrofits and demand reduction measures. Payments (up to 50% of the total project cost) are based on fixed incentive rates for actual energy savings (kWh) and peak demand (kW) reduction achieved in the first year after implementation.

• PG&E, SCE and SDG&E also offer prescriptive rebates (maximum $350,000/year per service account, per fuel) for upgrading to more efficient lighting, HVAC, water heaters, food service equipment, refrigeration, motors, window film, insulation and other equipment and measures. Fuel switching and new construction projects do not qualify for the prescriptive programs.

• Retro-commissioning programs offered by PG&E, SCE and SDG&E provide no-cost diagnostic and engineering resources for identifying sub-optimal performance of equipment and building systems, and financial incentives for implementing measures that increase energy efficiency and occupant comfort through adjustments, repairs or enhancements. Remuneration is based on energy savings and peak demand reduction. SDG&E customers may also be able to use on-bill financing to help pay for retro-commissioning implementation costs.

• PG&E, SCE, SDG&E and Southern California Gas (SoCalGas) provide on-bill financing (OBF) services that offer zero percent, no-fees loans of up to $250,000 to government entities for installation of qualified energy-efficiency measures. Loans are then paid back on the monthly utility bill. As of early fall, 2011, SCE's on-bill financing program is not accepting new applications and will remain suspended until additional funding becomes available; previously issued OBF loan reservations are continuing to be processed.

All commercial customers who participate in energy efficiency programs offered by the three IOUs are required to benchmark their eligible building(s) using ENERGY STAR® Portfolio Manager. PG&E and SDG&E provide information about benchmarking on their sites. Information is also available on ENERGY STAR's Benchmarking Starter Kit site.

In addition, the IOUs in California offer various unique programs including the following:

• PG&E's Integrated Energy Audits provide comprehensive technical analysis and assistance to identify all energy cost-saving options available and develop a comprehensive integrated energy strategy that may include energy conservation, demand response, time-of-use management and distributed generation options (e.g., solar or wind).

• PG&E's LED Street Light Program offers incentives for replacing customer-owned and -maintained street lights billed at PG&E's fixed LS-2 rate. PG&E also offers the LED Streetlight Turnkey Replacement Service for customers who want to avoid project management expense associated with city personnel or city-acquired contract labor.

• PG&E's services for federal government agencies include utility energy service contracts (UESCs), in which the utility arranges funding for project capital costs that are then repaid through cost savings from the energy efficiency measures. (For more on UESCs, see "What additional opportunities are available to me?", below.)

• SDG&E offers the Energy Savings Bid Program, which allows non-residential customers to develop and implement their own custom energy efficiency projects and propose the incentive amount needed. Eligible projects must save at least 500,000 kWh or 25,000 therms annually. The incentives range from $0.07 to $0.20/kWh of first-year electric savings, depending on the type of measure, and up to $1.00/therm saved for natural gas projects.

• SDG&E's Direct Install Program is open to qualifying small commercial customers with electric demand that does not exceed 100kW for 3 consecutive months and provides replacement of certain less efficient equipment with more energy efficient products at no cost.

• SoCal Gas offers several programs to non-residential customers:

  • Rebates are available to large commercial, small commercial, industrial and institutional customers for a wide variety of natural gas efficiency projects. Qualifying equipment includes boilers, pipe and tank insulation, steam traps, water heaters, furnaces and food service equipment.
  • The Energy Efficiency Calculated Incentive Program provides incentives of up to $1 million per project ($2 million per location) per year for large gas efficiency projects not covered by their basic rebate program (including new or replacement equipment, as well as for process improvements or new processes) . Eligible projects are required to undergo an energy analysis, but projects saving less than an estimated 200,000 therms/year may qualify to receive a no-cost analysis.
  • The Energy Assessments for Industrial Customers program offers free energy assessments to customers that use 250,000 therms or more per year to in order to help identify energy efficiency projects that may qualify for rebates (of up to $1 million per project or $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 (SMUD), each offer their own set of energy efficiency programs.

• LADWP offers a number of generous business rebate and incentive programs for its non-residential customers, including Commercial Lighting Efficiency, the Custom Performance Program, Chiller Efficiency, Energy Load Monitoring, Commercial Water Conservation, New Construction, the Non-Residential Custom Express Program, Small Business Direct Install (lighting), Refrigeration and Outdoor Area Lighting.

• SMUD offers both customized and prescriptive incentives for a wide variety of efficient equipment and efficiency measures including air-conditioning/refrigeration, lighting, lighting sensors, custom data center cooling, server virtualization, motor systems and process improvement equipment, food service equipment, plug load sensors and PC software.. Customers should read and follow the rebate application procedures and understand equipment eligibility requirements before making purchases. SMUD also participates in the Savings by Design Program for new office construction, as noted above.

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 Renewables and Efficiency (DSIRE).

Alameda Municipal Power offers several energy efficiency incentive programs, providing rebates for qualifying commercial lighting, HVAC equipment, reflective window film, and variable frequency drives. Alameda also offers energy audits for commercial facilities and customized rebates for equipment not included under the other programs, including motors, HVAC, computer systems and advanced technologies such as LED lighting and heat pump water heaters. For new construction projects, Alameda provides design assistance grants (up to $10,000 per project) and incentives for a whole building approach (must exceed Title 24 by 10% or more) or a building systems approach for smaller, less complex projects.

Anaheim Public Utilities offers a number of business energy efficiency incentives covering lighting, HVAC, heat pumps, industrial process improvements, motors, customized measures and design assistance in new construction. In addition, Anaheim provides free outdoor high pressure sodium lights with sensors. The utility's Small Business Energy Management Assistance Program provides rebates to customers with demand of less than 50 kW.

Burbank Water and Power (BWP) offers rebates to businesses for energy-efficient lighting retrofits, motor replacements, heat pumps, HVAC equipment, chiller retrofits and cool roofing. BWP also provides free energy and water use audits and up to $2,000 in retrofit rebates via the Business Bucks Program to small accounts (electricity costs of between approximately $100 and $3,000 per month)

Glendale Water and Power (GWP) offers a variety of incentives for retrofits and energy-efficient 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 utility conservation program offers rebates for energy-efficient lighting (up to 30% of the installation cost) and for qualified custom measures ($0.15 per watt reduced).

The City of Palo Alto offers a number of incentive programs for non-residential customers including rebates for various energy-saving projects (e.g., lighting, boilers, HVAC, chillers, water heaters, steam traps, tank, pipe and building insulation, window film, occupancy sensors,server virtualization and food service equipment;instant rebates for certain lighting, vending controls and refrigeration equipment through the Right Light+ program; free audits and implementation support for medium and large facilities (over 30,000 square feet and/or electric demand greater than 50 kW); solar hot water equipment; and energy-efficient new construction.

Riverside Public Utilities offers several programs:

• The Air Conditioning Incentive program provides rebates of $100/ton for Energy Star air conditioning units including heat pumps, packaged A/C 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 $630 ($25,000 maximum per customer account) for replacing older inefficient motors with 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. Incentives are 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 wide variety of rebates to its business customers for energy efficiency measures and equipment, capped at $500,000 per customer per year (excluding the Energy Innovation Grant, described below). Rebate programs include lighting, HVAC, chillers, data center optimization, PC power management, commercial washing machines, food service equipment, motors and variable frequency drives, energy-efficient building design, new construction projects over 25,000 sq. ft. (must exceed Title 24 by at least 10%) and custom rebates. In addition, SVP's Energy Innovation Program offers grants on a cents per kWh saved or percent of project cost basis, up to $250,000 per customer, for innovative new energy efficiency technologies, applications or solutions.

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

The California investor-owned utilities have filed new plans for 2012-2104 with the California Public Utilities Commission (CPUC). Under the current 3-year cycle (2009-2011), programs offered statewide by all three electricity IOUs include:

• The Technical Assistance and Technology Incentives (TA/TI) program offered by PG&E, SCE and SDG&E provides free demand response (DR) site assessments and financial incentives (up to $125/kW of verified load reduction, maximum 50% of incremental project costs) for installing eligible DR equipment that reduces electricity usage during periods of peak demand. This program is designed to provide increased flexibility to facilitate participation in the utilities' various DR incentive programs.

• Customers receive additional incentives (up to a total of $300/kW and 100% of incremental project costs) for enrolling in the Automated Demand Response (Auto-DR) program, which brings the "smart grid" to commercial and industrial customers of PG&E, SCE, and SDG&E participating in Critical Peak Pricing or the Demand Bidding Program. PG&E also offers Auto-DR to its PeakChoice customers (see program descriptions below). Auto-DR uses communication and control technology to automatically implement pre-programmed, pre-authorized load reductions through customer facilities' control systems, providing a fast and reliable automated alternative to manual response for peak pricing events. Eligible equipment includes energy management systems and software, wired and wireless controls for lighting, HVAC, thermostats, motors, pumps and other equipment capable of receiving curtailment signals.

• 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 or credit 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 with 30-minute notice. The incentives typically range from $7 to $9 per committed kW per month, even if no events are called, for a minimum curtailment commitment of 100 kW or 15% of the monthly average peak demand(whichever is larger). PG&E and SDG&E also offer a longer, 3-hour, notice in exchange for a lower incentive option ($3/kW), and SCE offers a shorter, 15-minute notice option for a higher incentive. Requests for curtailments (which can last up to four hours) cannot exceed one per day, ten 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 contracted with numerous third-party aggregators who 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 customers' behalf and help them develop load reduction strategies. The aggregators may also offer innovative program features – for example, 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.

• Under the Capacity Bidding Program (CBP), PG&E, SCE, and SDG&E participants receive a monthly incentive to reduce their energy use to a pre-determined amount once a CBP event is called by the utility, which can occur weekdays from May through October, 11 a.m. to 7 p.m. Customers have the option to enroll in CBP directly with the utility or through a third-party aggregator. Participants can opt for day-ahead notification, or receive higher incentive levels by choosing "day of" event notification. PG&E CBP participants may also be eligible to concurrently participate in additional PG&E demand response programs.

Some demand response and time-of-use programs are not common to all the California utilities, including the following:

• Critical Peak Pricing (CPP) has been adopted as the default rate for large commercial and industrial customers of SCE (demand greater than 200 kW) and SDG&E (demand greater than 20 kW). The rate structure offers lower electricity rates in return for setting a rate 3 to 5 times higher than the regular rate on up to fifteen "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 the first year of CPP participation. Participants may also opt for technical assistance to help them better take advantage of the program. SDG&E customers participating in the Day-Ahead option of the Capacity Bidding Program are not eligible for CPP.

• Peak Day Pricing (PDP) is the new default rate for PG&E's large commercial, industrial and agricultural customers, though customers who participate in Direct Access or any of the demand response programs were not automatically transitioned to PDP. Peak Day Pricing (PDP) is a "time varying pricing plan "with additional charges added during critical peak times (2-6 p.m. on 9 to 15 "Peak Event Days" per year, with some alternative durations available). Participants shield exposure to high prices during PDP events by shedding load during the peak price hours. Customers on E-19 and E-20 rate schedules (demand of 500-999 kW and 1000+ kW respectively) have the option to mitigate bill fluctuation by allotting a portion of their load to a "capacity reservation."

• The Demand Bidding Program (DBP) offered by PG&E and SCE provides incentive payments of up to $0.50/kWh for day-ahead curtailment commitments and $0.60/kWh for day-of commitments. Participants place bids online the day before the event for the amount of power they are willing to reduce (minimum 50 kW each hour), in increments of 2 hours or more. DBP events usually take place from noon to 8:00 p.m. and can occur on any weekday excluding holidays.

• PG&E's customizable PeakChoice Program is open to any customer that can provide a load reduction of at least 10 kW. The program offers participants financial incentives for curtailing load along with a high degree of flexibility in customizing the terms of participation (e.g., regarding curtailment amount, commitment option, time of advance notice, and number of event days). Participants in the PeakChoice program may not participate in PG&E's other demand response programs except for the Optional Binding Mandatory Curtailment program (see below).

• PG&E and SCE offer the Optional Binding Mandatory Curtailment Program, which provides customers with exemptions from rotating outages if they can reduce their circuit load during Stage 3 emergencies. Participants must reduce their power consumption by 5-15% below their established baseline load 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 SCE's Summer Discount Plan and SDG&E's Summer Saver program. These programs provide a credit on participants' summer season electric bills in return for allowing the utility to cycle air conditioners when needed during the months of May to 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 whose average monthly demand is 100 kW or more. The program provides a $0.10 per kWh on-bill credit for reducing load on prescheduled days and times on weekdays from June 1 through September 30.

• PG&E and SCE offer financial incentives for implementing technologies that permanently shift electric load by storing thermal cooling capacity during off-peak hours (e.g., by chilling water or making ice) in order to meet cooling load during subsequent peak hours.

For further details and information on additional demand response programs not covered here, contact your electric utility: PG&E, SCE, or SDG&E.

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

Glendale Water and Power offers incentives for participating in demand response through two programs:

• The voluntary economic-based Self-Scheduled Program provides a 1-day advance notice for events and pays customers for actual energy usage curtailed based on a customer-defined bid ("trigger price") or a utility-defined market price, during 1-hour time blocks between 6 a.m. and 10 p.m.

• The "Day-of" Performance Program pays participants a monthly reservation fee for committing to a specific level of curtailable load, whether a demand response event is called or not. Customers must be able to shed the agreed-upon load with a 30-minute notice, and are charged a penalty if they do not meet the contracted kW reduction.

What distributed energy resource options are available to me?

The Database of State Incentives for Renewables and Efficiency (DSIRE) provides detailed information on a large number of programs that provide incentives for renewable distributed generation in California. The following programs may be of particular interest to federal customers:

As of August, 2011, the California Solar Initiative (CSI) incentive levels for government customers of SCE were at step 8 ($0.15/kWh), while funds for non residential incentives in PG&E and SDG&E territories have been exhausted. However, the programs are still accepting applications, in case funding becomes available due to pending projects dropping out. To view current incentive levels, see the CSI Statewide Trigger Point Tracker. New legislation (Senate Bill 585) has been passed to devote additional non-residential solar PV incentive funds in order for California to meet its goals for the CSI, and is (Sept., 2011) awaiting the governor's signature.

CSI's Thermal Program provides cash rebates up to $500,000 for solar water heating systems on commercial buildings in the service territories of PG&E, SCE, SoCal Gas, and SDG&E.

Rebates are available for the installation of new distributed generation equipment, specifically wind turbines (30 kW minimum capacity), fuel cells and advanced energy storage, through the Self-Generation Incentive Program (SGIP), administered by PG&E, SCE, SoCal Gas, and, for customers of SDG&E, the Center for Sustainable Energy.

In December of 2010, the CPUC approved the new Renewable Auction Mechanism (RAM) program, which requires PG&E, SCE and SDG&E to purchase electricity from qualifying interconnected renewable energy systems between 1.5 MW and 20 MW in size. Under the market-based pricing program, sellers (developers and owners of renewable energy systems) compete for a contract through the auction mechanism. Eligible technologies include PV, wind, geothermal and biomass. Utilities will select bids based on lowest price until the auction capacity is reached. Projects must meet eligibility and viability requirements. More information and updates are available on the CPUC website.

LADWP's Commercial Solar Power Incentive Program pays a one-time up-front payment of $2.70/W for government systems. 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. Incentive levels are on a 10-step declining schedule; the incentive level is based on the amount of solar installed and connected to LADWP's grid. LADWP is also proposing to launch a feed-in-tariff pilot program in the fall of 2011.

SMUD offers two types of incentives for customers who install and produce electricity with a PV system. There is a one-time incentive of $0.65 per watt (up to 1MW) and also a performance based incentive (PBI), which pays $0.10 per kWh produced for a 5-year period. Other PBI options are available for systems larger than 1 MW.

California's Emerging Renewables Program provides cash rebates for small fuel cell and wind electric-generating systems. The program was temporarily suspended in March, 2011 for California Energy Commission review of its requirements. Additional information and updates are available on the CPUC website. Updates will be posted on the program website.

Feed-in tariffs (FIT) 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 FIT program is available to all customers of PG&E and SCE, and to public water and wastewater facilities in SDG&E territory, in addition to customers of Pacificorp, Sierra Pacific Power Company and other utilities. FIT prices are based on the state's Market Price Referent (MPR), which varies according to the year of commercial operation and the contract term. The FIT cannot be combined with any incentives that involve public funds, such as CSI, SGIP and any of the net metering programs. FIT incentives are not available for facilities that have participated in other renewable generation programs, including the California Solar Initiative (CSI), the Self-Generation Incentive Program (SGIP) or any net metering tariffs. Federal facilities should note that, per passage of SB 32 in 2009, changes to the FIT rules are pending, including increasing the system size cap to 3 MW and requiring publicly-owned utilities to offer the tariff. The CPUC expects to begin partial implementation by the end of 2011.

A number of rebates are also available from smaller utilities throughout the state. Remuneration for non-residential PV installations is typically based on either 1) the expected performance based incentive (EPBI), also called the standard rebate, which is an up-front payment limited to smaller installations (up to 30 kW or in some cases up to 100 kW); or 2) the performance based incentive (PBI) for installations between 30 (or 100) kW and 1 MW. The PBI pays out over the first five years of the system's life on a per kWh basis. Rebate levels decline over time, based on the cumulative installed capacity.

• Anaheim's Solar Advantage Program offers EPBI for installations up to 30 kW and PBI for installations between 30 kW and 1 MW. The program is fully subscribed for 2011 and will begin accepting new reservation applications on a first-come first-served basis beginning January, 2012.

• Burbank Water and Power's (BWP) Solar Support Rebate Program is on a declining rebate schedule that will zero out at the end of 2016. The PBI program is fully subscribed; rebates for installations over 30kW are not currently available. New funds are expected to be available in 2013. Check the program's home page for more information.

• Glendale Water & Power's Business Solar Solutions Program provides rebates ($100,000 maximum per customer per fiscal year) for solar PV systems smaller than 30 kW.

• The City of Palo Alto's PV Partner Program pays a step 3 standard rebate of $2.60/watt or a PBI of $0.33/kWh for small and medium commercial customer systems up to 30 kW, and a step 6 standard rebate of $2.00/watt or a PBI of $0.25/kWh for large commercial customer installations up to 1 MW, as of August 15, 2011.

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," including solar, wind and fuel cells, are fully exempt from any utility exit surcharge.

Are there energy efficiency programs sponsored by the state government?

There are opportunities for federal customers through the California Energy Commission's Public Interest Energy Research (PIER) program, which 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 GSA (e.g., PG&E, SDG&E, SCE, SoCal Gas, and City of Alameda), may be able to take advantage of 3rd-party financed energy efficiency projects called utility energy services contracts (UESCs). Information is available on GSA's Energy Center of Expertise Library Page. Federal facilities should contact their account executive to determine the level of each utility's participation.