Do PV Customers Benefit From Incentive Programs In California?


New research from Lawrence Berkeley National Laboratory (LBNL) and the University of Texas at Austin shows a historical pass-through rate of nearly 100% for California's photovoltaic solar rebate programs.

According to a report based on this research, the California Solar Initiative and the Emerging Renewables Program that preceded it have passed along nearly all of the money allocated for rebates to the PV customer, with variations by county.

Although PV customers could apply for the incentives directly, in practice, the report says, the vast majority of customers authorize the PV installer to submit incentive claims on their behalf. The installers typically provide the customer a discount on the installation prices that is nominally equal to the incentive received. The question at the focus of the report is whether incentives are fully passed through to customers because installers may opt to adjust their pre-incentive PV prices to account for those incentives.

The pass-through rate, thus, depends on how PV installers determine their pre-incentive PV prices. If such pre-incentive prices are higher when incentives are larger, then PV customers will not benefit fully from the provision of the incentives and, instead, installers will retain some fraction of the available incentive.

In general, the report says, installers considered PV rebates as outside factors when making pricing decisions. In addition, the results suggest a reasonably competitive market and – at least from the perspective of incentive pass-through – a well-functioning subsidy program, LBNL says.

The report's authors caution that the estimated pass-through rates may not apply outside of California or to all types of third-party-owned PV systems. In addition, the results focus narrowly on the pass-through of solar rebates. Broader ‘value-based pricing’ is not evaluated, which would consider the combined impact of state incentives electric utility bill savings, and tax incentives.

The report, ‘Incentive Pass-Through For Residential Solar Systems In California,’ is available for download here.

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