At the beginning of this year, California, long a leader in renewable energy, launched the nation’s first solar water heating rebate program. Dubbed the California Solar Initiative, or CSI-Thermal, the program will last until 2017 or until the allocated funds are spent. The program aims to assist Californians to install at least 200,000 solar water heaters in homes and businesses over the next seven years.
CSI-Thermal will provide cash incentives to home and business owners who replace their natural gas or electric water heating systems with solar units. Residents who currently heat their water with natural gas can receive a maximum installation incentive of $1875, and residents who currently heat their water with electricity can receive an incentive of up to $1250. There is also a 30% federal tax credit that can be claimed on the after-rebate cost of the installation.
The new incentive specifically relates to solar hot water (or solar thermal) systems. Solar thermal systems shouldn’t be confused with solar photovoltaic electricity systems, which convert the sun’s energy for use throughout the home. With a solar thermal system, you’re only harnessing the sun’s power to heat your hot water.
There are some key differences between the two systems. As blogger Andy Greene explains, solar thermal systems are now much more efficient than solar photovoltaic electricity systems. (The cost of installation remains about the same.) Solar thermal water systems convert about half of the sun’s energy into usable heating power; photovoltaics, on the other hand, convert only around 15%.
Overall, solar water systems produce about 10 times more energy per dollar than their solar electric counterparts, which makes them a particularly smart investment for investors and homeowners who want to go solar, but are waiting for the costs of solar electricity to drop. For Californians, the new incentive makes it much easier to begin the transition to renewable energy.
In addition to incentivizing the installation of solar thermal systems for California’s early adopters, the program’s organizers anticipate CSI-Thermal will aid in an expansion of the solar water heating market, and lead to an overall reduction in prices. State officials are hoping that the next seven years will see a steady breaking down of the current barriers to widespread take-up of solar units, namely cost and lack of awareness.
How It Works
Each incentive in the program is based on a declining 4-step scale, which means those who get in early will save more than those who opt in toward the end of the program. The program will be available to customers of PG&E, SDG&E, SoCal Gas and SoCal Edison.
Incentives will be paid upfront, based on calculations of first year energy savings. About 60% of the allocated funds have been reserved for commercial and multifamily systems, with the rest for single-family homes.
The California Public Utilities Commission (CPUC) will be hosting workshops to educate homeowners and contractors about energy-efficiency requirements, system sizing, metering requirements, and using the online energy savings calculation tool.
The program does have some exceptions: at the beginning of the program, certain solar thermal systems like space heating and floor heating will not be covered by the incentive. (However it’s anticipated that these will qualify for the program later on.)
New installations aren’t the only projects that qualify for the incentive: any solar thermal systems installed after July 15, 2009 can qualify for the rebate. For more details, visit the CPUC website.
Filed Under: green real estate investing
About the Author: Alex McQuilkin is a writer and student interested in sustainable design and urban living. He is studying urban planning at Columbia University in New York.