BILL ANALYSIS
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THIRD READING
Bill No: AB 1383
Author: Pavley (D), et al.
Amended: 9/2/05 in Senate
Vote: 21
SENATE ENERGY, U.& C. COMMITTEE : 7-3, 6/30/05
AYES: Escutia, Alarcon, Bowen, Dunn, Kehoe, Murray,
Simitian
NOES: Morrow, Battin, Cox
NO VOTE RECORDED: Campbell
SENATE APPROPRIATIONS COMMITTEE : 8-5, 8/25/05
AYES: Migden, Alarcon, Alquist, Escutia, Florez, Murray,
Ortiz, Romero
NOES: Aanestad, Ashburn, Battin, Dutton, Poochigian
ASSEMBLY FLOOR : 47-32, 6/1/05 - See last page for vote
SUBJECT : Solar energy: Low-Income Housing Development
Revolving
Loan Program
SOURCE : Global Green
DIGEST : This bill creates a grant to facilitate the
installation of solar energy systems in low-income housing.
ANALYSIS : Current law establishes several programs to
subsidize the cost of photovoltaic (PV) systems used by
retail electric customers. These subsidies are up-front
CONTINUED
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discounts on the installed cost of such systems.
This bill creates a revolving loan program, administered by
the California Energy Commission (CEC), for use by
affordable housing developers to finance up to 75 percent
of the cost of photovoltaic systems. The program is funded
out of existing funds set aside for photovoltaic subsidies.
The program sunsets on January 1, 2016.
This bill requires CEC to evaluate the level of funding
needed and provides that a certain amount of moneys would
be transferred from the Emerging Renewable Resources
Account and the self-generation incentive program for
distributed generation resources.
The bill requires CEC to collect a fee for each application
for an allocation. The bill sets forth requirements for
repayment of the allocations.
This bill requires CEC to submit a report, by October 31,
2007, and annually thereafter, to the Legislature on the
portfolio of loans, the condition of the fund, and the
anticipated demand. CEC would also be required to report
by January 1, 2006 on the estimated amounts needed to be
transferred to the fund from various specified sources,
upon appropriation of the Legislature.
Background
What's a Photovoltaic System?
A photovoltaic, or PV, system has two main parts, the
roof-mounted PV panels which transform sunlight into
electricity and the inverter which transforms the direct
current created by the PV panels into alternating current
which is usable in the home or on the electric grid. The
orientation of the PV panels is crucial to the success of
the system; they must be south- or west-facing. The panels
must not be shaded and should be angled to capture the most
sunlight. A typical residential PV system is 2kw - 4kw.
The installed cost is about $9000/kw so a 3kw system would
cost $27,000. Rebates have been as high as $4500/kw and
are now at $2,800/kw, so the 3kw system would today cost
$18,600 after rebates. A state tax credit would further
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reduce the price by 7.5 percent to $17,205. For commercial
customers the final after-tax cost is much lower because of
greatly accelerated depreciation and a 10 percent federal
tax credit.
Current Subsidies
California has several subsidy programs targeted
specifically at PV systems. The CEC administers a program
for residential- and small commercial-sized PV systems that
provides a rebate for a portion of the installed cost of a
PV system. That rebate was initially $4.50/watt, or about
50 percent of the system cost, and has since been lowered
to $2.80/watt. This program is funded through the Public
Goods Charge (PGC), which is a surcharge on all IOU
electric customers, and is budgeted at about $30 million
annually, though in 2004 the program spent $70 million on
PV. The Public Utilities Commission administers a similar
program for commercial-sized customer-owned generation,
including PV systems. This program, known as the
Self-Generation Incentive Program (SGIP), costs $125
million annually and is paid for out of electric rates.
The SGIP PV subsidy is $3.50/watt and is oversubscribed.
In addition to these two subsidy programs there are
numerous other state and federal programs which
substantially reduce the after-tax cost of PV systems,
particularly for commercial customers. These include a 10
percent federal tax credit, accelerated depreciation, a 7.5
percent state tax credit, accelerated depreciation for
state taxes, and favorable property tax treatment. By
themselves these tax benefits for commercial customers are
worth more than the state subsidy, according to CEC
estimates. Other state subsidies are net metering, which
reverses the electric meter as electricity is produced, and
an exemption from exit fees.
Affordable Housing
Of the 20,000 affordable housing units built annually in
California, about 5000 are financed through tax credits.
The tax credit financing, which is administered by the
California Tax Credit Allocation Committee, an arm of state
government whose voting members include the Governor,
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Treasurer, and Controller, uses the funds from the sales of
tax credits to investors. The amount of tax credits
allocated to any affordable housing project is reduced by
any revenue received by the project, which includes rebates
for PV systems. For this reason solar rebates do not
encourage the use of PV systems in affordable housing
projects that rely on tax credit financing.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2005-06 2006-07
2007-08 Fund
Transfers $2,500$5,000$5,000
Special*
*The bill transfers funds from the Emergency Renewable
Resources Account and the fund identified (and unnamed) in
subdivision (a) of Chapter 329 (Statutes of 2000), or from
the funds appropriated in SB 1 (Murray and Campbell), the
Million Solar Roofs Initiative.
SUPPORT : (Verified 8/18/05)
Global Green (source)
American Federation of State, County, and Municipal
Employees
California Association of Local Housing Finance Agencies
Clean Power Campaign
Cooperative Community Energy
First Community Housing
Habitat for Humanity
Housing California
Kyocera Solar, Inc.
PV Manufacturers Alliance
Sierra Club California
Southern California Association of Non-Profit Housing
Union of Concerned Scientists
Vote Solar
Western Center on Law and Poverty
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ASSEMBLY FLOOR :
AYES: Arambula, Baca, Bass, Berg, Bermudez, Calderon,
Canciamilla, Chan, Chavez, Chu, Cohn, Coto, De La Torre,
Dymally, Evans, Frommer, Goldberg, Hancock, Jerome
Horton, Jones, Karnette, Klehs, Koretz, Laird, Leno,
Levine, Lieber, Liu, Matthews, Montanez, Mullin, Nation,
Nava, Negrete McLeod, Oropeza, Parra, Pavley,
Ridley-Thomas, Ruskin, Saldana, Salinas, Torrico, Umberg,
Vargas, Wolk, Yee, Nunez
NOES: Aghazarian, Benoit, Blakeslee, Bogh, Cogdill,
Daucher, DeVore, Emmerson, Garcia, Harman, Haynes,
Shirley Horton, Houston, Huff, Keene, La Malfa, La Suer,
Leslie, Maze, McCarthy, Mountjoy, Nakanishi, Niello,
Plescia, Richman, Sharon Runner, Spitzer, Strickland,
Tran, Villines, Walters, Wyland
NO VOTE RECORDED: Gordon
NC:nl 9/3/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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