Under a plan approved by the Board of Water and Power Commissioners, the Los Angeles Department of Water and Power (LADWP) will relaunch its Solar Incentive Program (SIP) next month with double the budget for the next three years, a faster and more transparent customer experience, and revised incentive levels that are more in line with market pricing and allow greater participation. LADWP will resume accepting applications for solar incentives starting Sept. 1, 2011, at 10:00 a.m.

The new SIP guidelines incorporate public input received during workshops last month. The program had been placed on temporary hold April 9, as the demand for incentives was far outpacing the available budget by about 3 to 1. The suspension was initiated to catch up with a backlog of applications and solar inspections; increase customer education to address safety concerns; gain input on improving the program; and identify alternative financing options.

"As we re-launch the Solar Incentive Program in September, it is extremely important that we leverage the incentives to achieve the most solar power and encourage as much customer participation as possible. We also want to grow solar at a steady and sustainable pace while being prudent about the cost to all customers who pay for this program through their rates," said LADWP General Manager Ronald O. Nichols.

Mr. Nichols has also asked staff to investigate more options for making solar affordable to low income customers. "We need to do more to make solar accessible to customers of all income levels. In the next few months we will come back with more leasing options and other proposals for lower income households," he said.

Under SB 1, the state's "Million Solar Roofs" legislation established a goal of 280 megawatts and mandated that LADWP spend $313 million through the end of 2016 for solar photovoltaic incentives. "We are committed to spending the full $313 million for customer incentives and achieving as much solar as possible with that level of funding," Mr. Nichols said.

"One of the biggest dilemmas we have faced in this program is setting the incentive level to make the program more attractive to customers since our power rates were, and continue to be, much lower than those of the state's other major utilities," notes Aram Benyamin, Senior Assistant General Manager - Power. The paradox is that offering higher incentive levels made less money available for more customers to install solar systems.

"Now that significant tax incentives are being offered by the federal government, we have an opportunity to reduce our incentive levels to be more in line with market pricing, which should give more customers the opportunity to build solar and increase the amount of solar PV that can be built through this program," Mr. Benyamin said.

Under the guidelines approved Tuesday, the incentive levels were revised to be consistent with the California Solar Initiative, which is better aligned with existing solar markets and achieves a reasonable payback period for customers. LADWP will continue to offer the option of assigning the "REC" (Renewable Energy Credit) to LADWP and receiving an additional $0.40 per watt-which makes the incentive significantly higher than the state minimum.

Also to encourage more solar and benefit more customers, LADWP has increased the budget for incentive payments to $60 million in the current fiscal year and anticipates requesting an additional $60 million per year in each of the next two fiscal years. This is made possible by using long-term bond financing to lower the program's annual budget impact. The higher budget for incentives allows more solar to be built faster.

Under the revised program, LADWP will suspend the program when new reservations reach the $40 million level until the next fiscal year. This will ensure the program stays on a steady pace, within its annual budget, while allowing applications already approved and in the pipeline to proceed.

Since the program began in August 2006, LADWP customers have installed 35 MW under SB 1 and the Department expects that an additional 25 MW will be installed during the current fiscal year. An additional 35 MW in confirmed incentives is reserved and pending installation by customers and their installers for a program total of 95 MW of installed and pending Solar PV in the City.

The revamped program will utilize an online, automated application tool, "PowerClerk," designed to streamline the customer experience and increase transparency of the process. "A customer will register and apply for the incentive online, then be able to track their application throughout the entire process," said Mr. Benyamin said. "At any given time, the customer will know where they stand in the process."

The revised guidelines were modified to address comments received from over 400 people who participated in a series of outreach meetings conducted last month. Many of the comments focused on the need for a more transparent and sustainable program. Participants also commented on some of the specific proposals, such as an annual reservation limit of $40 million per year, requiring proof of a building permit prior to submitting the application, the lowered incentives levels, and lowering the incentive levels for leased residential systems to match those for commercial systems.

In response, LADWP revised the proposed guidelines to create more transparency and more flexibility, including:

The new guidelines set an annual reservation limit of $40 million per year. To address concerns, LADWP will provide frequent online updates to show the running total of reservation requests so that installers and customers will be able to monitor reservation requests.

Participants will have up to 60 days after receiving a confirmation on their solar incentive reservations to submit their building permit and also have the ability to request an extension.

LADWP will monitor the incentive levels and modify them if participation dips too low.

The incentive levels for leased residential systems will be lowered to match those for commercial systems. Officials said this change is appropriate because leased systems benefit from a federal tax allowance for an accelerated depreciation of a solar installation. Purchased residential or governmental systems cannot take advantage of accelerated depreciation.

LADWP also modified proposed measures to address installers and customers activating their systems prior to LADWP inspection and approval.

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