1. Expand and Extend the Federal Investment Tax Credit

 As Congress looks to recover jobs and spur new economic activity that leads to job growth and consumer savings, they should prioritize extending and expanding the Investment Tax Credit (ITC) for distributed clean energy. Currently, the ITC provides consumers with a 26% credit for solar and energy storage systems in 2020, steps down to 22% in 2021, and expires for residential systems in 2022 and lowers to 10% for commercial systems that same year. Congress should increase the tax credit to drive more consumers toward clean energy purchases, extend it out beyond 2022, and allow for stand-alone energy storage as well.

2. Launch Resilient Solar Schools Initiatives

The state should also create the Clean Energy Resilient Schools Bond program, with the goal of equipping 2,000 K-12 public schools with clean and resilient solar-charged batteries. This initiative should be funded through state revenue bonds for energy storage at schools, which the state can issue without ballot approval. The bonds will be repaid by savings in school utility costs and energy market revenue. Some amount of loan forgiveness will be expected for schools serving low-income populations and schools that provide community services. The program should include technical assistance to support schools applying for a resiliency grant and to help manage a school’s process for procurement and installation of a storage system with the best combination of price and performance. Revenue bonds will not have a state budget impact in the first five years of the program while financing as much as $900 million in construction immediately.

3. Cut Red Tape by Making Solar & Storage Permitting “No Touch”

California should launch a statewide initiative to provide local building departments with technical support and/or grants to adopt “no touch” (i.e. virtual) permitting for solar and other clean energy technologies. This initiative would help cities and counties adopt software such as the National Renewable Energy Laboratory’s SolarAPP, a free online portal that provides instant and standardized permitting, as well as virtual inspection practices. “No touch” permitting is not only safe during a pandemic as it is “no touch” but it also cuts soft costs for installers, helping make solar and energy storage affordable for more consumers. In partnership with the industry and environmental stakeholders, the state-lead initiative could develop resources for and conduct outreach to building departments, encourage and/or provide funding for cities and counties to adopt permitting software. 

4. Launch One Million Solar-Charged Batteries

Fourteen years ago, California embarked on a great vision to build a million solar roofs through a variety of incentive policies. The initiative worked, leading to three times the amount of clean energy than originally anticipated. California should once again set an ambitious goal for itself for energy storage. First, the California Energy Commission should administer a new statewide program to incentivize battery installation that will lead to a million customer-sited batteries. This funding can be included in a stimulus bond on the November ballot. Alternatively, it could be a simple tax credit for consumers, or a program funded by federal stimulus dollars. Program budget: $700 million over three years, with additional funding needs assessed at a later date.

5.  Unleash Power of Existing Ratepayer Storage & Equity Programs

The Self Generation Incentive Program (SGIP), managed by the California Public Utilities Commission, is an excessively complex program for consumers, businesses and government entities funded throughs mall monthly surcharges on natural gas bills. Although the purpose of the program is to help encourage consumers to invest in energy storage and other clean energy technologies, many consumers and equipment providers avoid the program due to its onerous paperwork and strict limitations. The utilities that administer the program do not have a natural incentive to make it successful and the CPUC’s focus is elsewhere. Solutions include:

• The commercial projects budget has $350 million but is moving at a slow pace. The CPUC recently increased incentive levels for low-income customers and customers in High Fire Threat Districts, but they did not increase incentive levels for general commercial projects. The CPUC can stimulate clean energy business activity by increasing the incentive level in this budget category. This can be done without increasing the total program budget. The CPUC should also reconsider the allocations to different budget categories to steer funding to projects that are ready for construction.

• An independent evaluator should be hired with expertise in process efficiency. The evaluator would recommend changes to the SGIP application process to ease participation in the program and speed the rebate process.

The Solar on Multifamily Affordable Housing (SOMAH) program is a new incentive program for low-income apartment complexes created by the Legislature in 2015 (AB 693-Eggman). The project developer must wait until the project is complete to receive the rebate. There is significant customer interest in the program but solar providers are having a difficult time developing these projects due to cash flow shortages related to COVID-19. Immediate solutions include paying part of the incentive earlier in the site development process for both SGIP and SOMAH. Also, the program should fix rules that make it difficult for new home construction to participate.

6. Remove Utility Barriers for Connecting Solar & Storage Systems

Every time a customer wants to install a solar or storage system, the utility must review the proposed installation for grid safety and adherence to various tariff requirements. For many small systems this is a straightforward and quick process. For larger projects, it is often time consuming and painful. Utilities have agreed to make certain changes to their interconnection review processes to make some of the steps more relevant to actual projects, but the utilities are incredibly slow to implement those changes. Years can go by before databases are updated and processes are improved. There could hardly be a more shovel-ready project than one that is waiting for approval to construct. The CPUC should increase its oversight of utility implementation of changes to the interconnection review process.
  

7. Increase Efforts to Reduce Natural Gas Usage in Buildings

Consumers should be given an extra boost from the state to invest in fuel switching at their homes and businesses. The program should be technology neutral and include zero-carbon water heating technologies such as heat pumps and solar hot water systems, as well as all-electric appliances. A framework has been established for the Building Decarbonization Pilot Programs administered by the CEC and the CPUC, but there is not enough funding in those pilots for consumer rebates. Stimulus funds should supplement the new framework to include consumer rebates. Using handbook language from previous programs like CSI-Thermal will ensure the program is shovel ready. We recommend a three-year program budget of $300 million.

8. Protect Clean Energy Investments from Unnecessary Local Taxes

• Ensure financed (leases and Power Purchase Agreement) distributed solar and solar and storage systems for both new homes/buildings and home/building retrofits qualify for the state sales and use tax exemption.

• Retain the maximum rate of the ad valorem tax on real property to 1% of the full cash value even if there is a subsequent change in ownership.