Energy Incentive Programs, California

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Updated March 2015

What public-purpose-funded energy efficiency programs are available in my state?

California's restructuring law has provided funding for energy efficiency programs through a non-bypassable Public Goods Charge (PGC) since 1996. The charge technically expired in 2012, but funds are still collected through the new Electric Program Investment Charge (EPIC). The California Public Utilities Commission (CPUC) has oversight over EPIC with investments administered by the California Energy Commission and the state’s three large electric investor-owned utilities (IOUs). In 2014, over $1.7 billion was budgeted for energy efficiency programs in the state.

A wide variety of public-purpose-funded energy efficiency programs are administered by the state’s IOUs: Pacific Gas and Electric (PG&E), Southern California Edison (SCE), Southern California Gas (SoCal Gas), and San Diego Gas and Electric (SDG&E), and Southwest Gas Corporation (SWG).

Programs offered by more than one investor-owned utility include:

  • The Savings by Design program, offered by PG&E, SCE, SDG&E, and SoCal Gas, as well as the Sacramento Municipal Utility District (SMUD), provides two incentive tracks for integrating energy efficiency measures into new construction and major renovations, the preferred whole building approach and the systems approach. The program offers building owners and their design teams a range of services, including design assistance, owner’s incentives (up to $0.40 per annualized kWh and $1.00 per annualized therm savings), and design team incentives (up to $50,000, plus an extra $5,000 stipend for early collaboration). Owner Incentives include a separate 20% bonus for incorporating end-use monitoring and a 10% bonus for enhanced commissioning. The maximum total incentive per project is $150,000.

  • Under the Statewide Customized Offering for Business, PG&E, SCE, SDG&ESoCal Gas, and SWG offer financial incentives for efficiency upgrades that may include lighting, air conditioning, refrigeration, motors, variable speed drives, and natural gas equipment, as well as controls, building shell retrofits  and demand reduction measures. Payments (up to 50% of the total project cost) are based on fixed incentive rates for actual energy savings (kWh and/or therms) and peak electric demand (kW) reduction achieved in the first year after implementation. SCE offers bonus incentives for comprehensive projects that include measures from at least three different technology categories, plus participation in either a retro-commissioning or price-responsive demand response program.

  • PG&E, SCESDG&E, and SWG also offer prescriptive rebates for upgrading to more efficient lighting, HVAC, water heaters, food service equipment, refrigeration, motors, window film, insulation and other specific equipment and measures. Fuel switching and new construction projects do not qualify for these prescriptive programs. 

  • Retro-commissioning programs offered by PG&E, SCE, SDG&E, and SoCal Gas provide no-cost diagnostic and engineering resources for identifying sub-optimal performance of equipment and building systems, plus financial incentives (up to $0.08/kWh, $1.00/therm, and $100/on-peak kW saved) for implementing no- and low-cost measures that increase energy efficiency and occupant comfort through adjustments, minor repairs or enhancements. Remuneration rates are based on the amount of energy savings and peak demand reduction. Customers may be able to use on-bill financing to help pay for retro-commissioning implementation costs.

  • PG&E, SCE, SDG&E, and SoCal Gas provide on-bill financing (OBF) that offers government entities zero percent, no-fee loans of up to $250,000 (or $1 million under certain conditions), with terms of up to ten years, for installation of qualified energy-efficiency measures installed under specified utility incentive programs. Loans are then paid back on the monthly utility bill. In some cases, the monthly energy savings may be equal to or greater than the monthly payment. PG&E and SDG&E offer incentives for HVAC equipment tune-ups, maintenance and equipment upgrades.

  • The California Energy Commission’s Non-Residential Building Energy Use Disclosure Program (AB 1103) requires non-residential building owners to benchmark their buildings and disclose the results at the time of sale, lease or refinancing. Most non-residential buildings with a gross floor area of 10,000 sq. ft. or greater are required to comply. Buildings with floor area between 5,000-10,000 sq. ft. are required to comply by July 1st, 2016. All commercial customers who participate in energy efficiency programs offered by California’s three electric IOUs are required to benchmark their eligible building(s) using ENERGY STAR® Portfolio Manager. PG&E, SDG&E, and SoCal Gas provide information about benchmarking on their sites. Information is also available on ENERGY STAR’s Portfolio Manager Benchmarking Starter Kit site.

In addition, the IOUs in California offer various unique programs, educational resources, and training:

  • PG&E programs include the following:

    • The LED Street Light Program offers incentives for replacing customer-owned and -maintained street lights billed at PG&E’s fixed LS-2 rate.

    • PG&E also offers the LED Streetlight Turnkey Replacement Service for customers who want to avoid project management expense associated with city personnel or city-acquired contract labor.

    • PG&E’s Services for federal government agencies include utility energy service contracts (UESCs), in which the utility arranges funding for project capital costs that are then repaid through cost savings from the energy efficiency measures. (For more on UESCs, see “What additional opportunities are available to me?” below).

  • SDG&E offers the Direct Install Program which is open to qualifying small commercial customers with electric demand that does not exceed 100kW for three consecutive months and provides no-cost replacement of certain types of equipment with more energy-efficient products.

  • SoCal Gas non-residential programs include:

    • Natural gas equipment rebates, which are available to large commercial, small commercial, industrial and institutional customers for a wide variety of efficiency projects. Qualifying equipment includes boilers, pipe and tank insulation, steam traps, water and pool heaters, energy management systems, furnaces and food service equipment.

    • The Energy Efficiency Calculated Incentive Program provides incentives of up to $1 million per project ($2 million per location) per year for large gas efficiency projects not covered by the basic rebate program (including new or replacement equipment, as well as for process improvements or new processes). The payment is $1.00 per annualized therm savings or 50% of project cost, whichever is less. Eligible projects are required to undergo an energy analysis, but projects saving less than an estimated 200,000 therms/year may qualify to receive a no-cost analysis.

    • The Energy Assessments for Industrial Customers program offers free energy assessments to customers that use 250,000 therms or more per year to in order to help identify energy efficiency projects that may qualify for rebates (maximum $1 million per project or $2 million per site per year).

California’s two largest municipal utilities, the Los Angeles Department of Water and Power (LADWP) and the Sacramento Municipal Utility District (SMUD), each offer their own set of energy efficiency programs.

  • LADWP offers a number of generous rebate and incentive programs for its non-residential customers, including Commercial Lighting Efficiency, the Custom Performance Program, Chiller Efficiency, Energy Load Monitoring, Commercial Water Conservation, New Construction, the Custom Express Program, Small Business Direct Install (no-cost efficient lighting and water conservation measures), Refrigeration, and the Retrocommissioning Express Program.

  • SMUD offers both customized and prescriptive incentives for a wide variety of efficient equipment and measures including air-conditioning, refrigeration, lighting, lighting sensors, custom data center cooling, server virtualization, motor systems and process improvement equipment, food service equipment, plug load sensors and PC software. SMUD also participates in the Savings by Design Program for new office construction, as noted above.

What other utility energy efficiency programs are available?

In addition to the utility energy efficiency programs described in the previous section, many other municipal and public utilities offer programs. Several are listed below. For information about additional incentive programs offered by smaller utilities, visit the Database of State Incentives for Renewables and Efficiency (DSIRE).

Alameda Municipal Power offers several energy efficiency incentive programs for existing buildings and new construction projects, including rebates for qualifying commercial lighting and HVAC equipment, as well as customized rebates for equipment not included under the other programs. For new construction projects, Alameda provides design assistance grants and incentives (up to $10,000 per project) for a whole building approach (must exceed Title 24 by 10% or more) or a building systems approach for smaller, less complex projects. 

Anaheim Public Utilities offers a number of non-residential energy efficiency incentives covering lighting, HVAC, heat pumps, motors, customized measures, and new construction projects. In addition, Anaheim provides free outdoor high pressure sodium lights with sensors. The utility’s Small Business Energy Management Assistance Program provides rebates to customers with peak demands of less than 50 kW.

Burbank Water and Power’s (BWP) Energy Solutions program provides up to $100,000 in cash rebates for energy-efficient retrofits including lighting, motor replacements, heat pumps, HVAC equipment, chillers, cool roofing, and computer power management software. BWP’s Business Bucks Program also provides free energy and water use audits and up to $5,000 in retrofit rebates to customers with annual energy usage below 250,000 kWh.

Glendale Water and Power (GWP) offers a variety of incentives for energy efficiency retrofits and energy-efficient new construction projects for business customers whose monthly electric bill is greater than $3,000. Rebates can cover up to 20% of installed cost and 100% of incremental cost (maximum $50,000 per year per customer, not to exceed the estimated value of saved energy over the life of the measures). GWP’s Smart Business Energy Saving Upgrade Program offers free energy upgrades (value up to $2,000) to small business customers (monthly bill less than $3,000).

The City of Lompoc Utility Department’s utility conservation program offers incentives for a wide array of energy-efficient equipment including a lighting rebate (up to 30% of the installation cost) and $0.15 per watt reduced for qualified custom measures.

The City of Palo Alto offers a number of incentive programs for non-residential customers including rebates for efficient equipment and measures including lighting, boilers, HVAC, chillers, water heaters, steam traps, tank, pipe and building insulation, window film,  occupancy sensors, server virtualization and food service equipment.  Also available are custom rebates based on first year energy savings. The Right Lights for Small Business program provides instant rebates (paid to the contractor) for certain efficient lighting, vending, and controls equipment.

Riverside Public Utilities offers the Commercial Energy Efficiency program, which provides rebates for a variety of efficient products and measures, including air conditioners and heat pumps, HVAC tune-ups, evaporative coolers, pool pumps, Energy Star-rated products, and weatherization measures.

Silicon Valley Power (SVP) offers a wide variety of rebates to its business customers for energy efficiency measures and equipment, capped at $500,000 per customer per year (excluding the Energy Innovation Grant, described below). Rebate programs include lighting, HVAC, chillers, data center optimization, PC power management, commercial washing machines, food service equipment, motors and variable frequency drives, energy-efficient building design, new construction projects over 25,000 sq. ft. (must exceed Title 24 by at least 10%) and custom rebates. In addition, SVP’s Energy Innovation Program offers grants on a cents per kWh saved or percent of project cost basis (up to $250,000 per customer) for innovative new energy efficiency technologies, applications, or solutions.

What load management/demand response options are available to me?

PG&E, SDG&E, and SCE offer a number of statewide programs:

  • The Automated Demand Response (Auto-DR) program provides free technical assistance and generous incentives to customers of PG&E, SCE, and SDG&E for installing automated DR equipment.  Participation is open to customers enrolled in a qualifying DR or time-varying pricing programs (PG&E’s Peak Day Pricing or SCE and SDG&E’s Critical Peak Pricing program). Auto-DR uses communication and control technology to automatically implement the customer’s chosen pre-programmed load reductions, providing a fast and reliable way to respond to peak events, while still leaving the customer in complete control. Incentives range from $125 to $400/kW of reduction capability, depending on level of automation and utility.  Eligible equipment includes energy management systems and software, wired and wireless controls for lighting, HVAC, thermostats, motors, pumps and other equipment capable of receiving curtailment signals. SCE also offers the Auto-DR Express program to smaller customers (up to 400 kW peak demand).

  • The Base Interruptible Program (BIP) offered by PG&E, SCE, and SDG&E pays participants to reduce electric load to (or below) a level pre-selected by the customer (called the firm service level or FSL) that is below its historic average maximum demand. Customers receive a monthly incentive payment or credit based on the size of the curtailable portion of their load, in return for committing to reduce to the FSL when called upon by the utility with thirty minutes notice. The incentives typically range from $7 to $9 per committed kW per month, even if no events are called.  There is a minimum curtailment commitment of 100 kW, or 15% of the monthly average peak demand (whichever is larger). PG&E and SDG&E also offer a longer, 3-hour, notice in exchange for a lower incentive option ($3/kW), and SCE offers a shorter, 15-minute notice option for a higher incentive. Requests for curtailments (which can last up to four hours) cannot exceed one per day, ten per month, or 120 hours per year (90 hours for the lower incentive options).  Penalties apply for customers that fail to reduce load as requested—the amount depends on the utility and the incentive option. All three utilities have contracted with numerous third-party aggregators who recruit customers to participate in BIP and manage their participation process. By serving as an intermediary, the aggregators can handle many of the details on customers’ behalves and help them develop load reduction strategies. The aggregators may also offer innovative program features – for example, by assuming the risk of non-compliance penalties or by allowing customers to participate who might otherwise be too small to enroll directly in the utility’s program. BIP participants are also be eligible for simultaneously participating in one of the other demand response programs, (e.g., time-varying pricing or PG&E/SCE’s Demand Bidding Program), which allows customers to take advantage of rate credits, reduced energy charges and incentives associated with both programs, with some restrictions.

  • Under the Capacity Bidding Program (CBP), PG&E, SCE, and SDG&E participants receive a monthly incentive for pledging to reduce their energy use to a pre-determined amount in the event a CBP event is called by the utility, which can occur weekdays from May through October, 11 a.m. to 7 p.m. The program offers either a day-ahead or day-of notification option. Customers receive the monthly payment (varies by utility, time of year and notification option) whether or not an event is called. Failure to reduce the pledged amount during an event will result in reduced incentives and possible penalties for not meeting at least 50% of the pledge. Customers typically enroll in CBP through a third-party aggregator, who manages their participation and relays their monthly reduction pledge, which can vary. Participants can opt for day-ahead notification, or receive higher incentive levels by choosing “day of” event notification. PG&E CBP participants may also be eligible to concurrently participate in additional PG&E demand response programs.

Some demand response and time-of-use programs are not common to all the California utilities, including the following:

  • Critical Peak Pricing (CPP) from SCE and SDG&E (also called the Summer Advantage Incentive) is a rate structure that offers lower electricity rates year-round in return for setting a higher rate on specific summer afternoons. The rate is three to five times higher than the regular rate on up to fifteen “critical peak” afternoons during the summer with customers notified of CPP days on a day-ahead basis. It is also the default rate for large commercial and industrial customers of SCE. For new program entrants, a bill protection option is available that prevents participants from paying more than they would have under their previous rate during the first year of CPP participation. Participants may also opt for technical assistance to help them better take advantage of the program. SDG&E customers participating in the Day-Ahead option of the Capacity Bidding Program are not eligible for CPP.

  • Peak Day Pricing (PDP), very similar to SCE’s and SDG&E’s Critical Peak Pricing (see above), is the default rate for PG&E’s large commercial, industrial and agricultural customers. Small and medium business customers (demand 200 kW and less) will automatically transition to PDP beginning November, 2014. PDP is a “time varying” pricing plan with additional charges added during critical peak times (2-6 p.m. on 9 to 15 “Peak Event Days” per year, with some alternative durations available). Participants shield their exposure to high prices during PDP events by shedding load during the peak price hours. Customers on E-19 and E-20 rate schedules (demand of 500-999 kW and 1000+ kW respectively) have the option to mitigate bill fluctuation by allotting a portion of their load to a “capacity reservation.”

  • The Demand Bidding Program (DBP) offered by PG&E and SCE provides incentive payments of up to $0.50/kWh for curtailment commitments. Participants place bids online the day before a peak event for the amount of power they are willing to reduce (minimum 10 kW each hour), in increments of two hours or more. DBP events usually take place from noon to 8:00 p.m. and can occur on any weekday excluding holidays. There is no penalty for failure to reduce electric load during an event.

  • PG&E and SCE offer the Optional Binding Mandatory Curtailment Program, which provides customers with exemptions from rotating power outages if they can reduce their circuit load during Stage 3 emergencies.  Participants must reduce their power consumption by 15% below their established baseline load for the duration of every rotating outage event. The penalty for failure to reduce as requested is $6.00 per kWh for energy use that exceeds an established baseline.

  • SCE’s Summer Discount Plan and SDG&E’s Summer Saver program offer summer air conditioner cycling programs to commercial customers These programs provide a credit on participants’ summer season electric bills in return for allowing the utility to cycle air conditioners when needed during the months of May to September. Customers can choose among several options regarding the frequency and duration of curtailments, each with corresponding remuneration levels. 

  • SCE offers the Scheduled Load Reduction Program (SLRP) to qualified bundled-service customers whose average monthly demand is 100 kW or more. The program provides a $0.10 per kWh on-bill credit for reducing load on prescheduled days and times on weekdays from June 1 through September 30.

  • PG&E and SCE offer financial incentives for implementing technologies that permanently shift electric load by storing thermal cooling capacity during off-peak hours (e.g., by chilling water or making ice) in order to meet cooling load during subsequent peak hours.

Glendale Water and Power offers incentives for participating in demand response through two programs:

  • The voluntary economic-based Self-Scheduled Program provides a 1-day advance notice for events and pays customers for actual energy usage curtailed based on a customer-defined bid (“trigger price”) or a utility-defined market price, during 1-hour time blocks between 6 a.m. and 10 p.m.

  • The “Day-of” Performance Program pays participants a monthly reservation fee for committing to a specific level of curtailable load, whether a demand response event is called or not. Customers must be able to shed the agreed-upon load with a 30-minute notice, and are charged a penalty if they do not meet the contracted kW reduction.

What distributed energy resource options are available to me?

The Database of State Incentives for Renewables and Efficiency (DSIRE) provides detailed information on a large number of programs that provide incentives for renewable distributed generation in California. The following programs may be of particular interest to federal customers:

In 2011, Senate Bill 585 provided additional non-residential solar PV incentive funds in order to help California meet its renewable energy goals. California Solar Initiative (CSI) incentives are available on a first-come, first-served basis through your utility. To view current incentive levels, see the CSI Statewide Trigger Point Tracker.

CSI’s Thermal Program provides cash rebates up to $500,000 for solar water heating systems on commercial buildings in the service territories of PG&E, SCE, SoCal Gas, and SDG&E.

Rebates are available for the installation of new distributed generation equipment, specifically wind turbines, combined heat and power (CHP), biogas, fuel cells and advanced energy storage, through the Self-Generation Incentive Program (SGIP), administered by PG&E, SCE, SoCal Gas, and, for customers of SDG&E, the Center for Sustainable Energy. There are no minimum or maximum system size criteria, however incentives (which range from $0.44/watt to $1.46/Watt, depending on technology) are capped at 3 MW.

Under the CPUC’s Renewable Auction Mechanism (RAM) program, PG&E, SCE, and SDG&E are required to purchase electricity from qualifying interconnected renewable energy systems between 3 MW and 20 MW in size. Under the market-based pricing program, sellers (developers and owners of renewable energy systems) compete for a contract through the auction mechanism. Eligible technologies include PV, wind, geothermal and biomass. Utilities will select bids based on lowest price until the auction capacity is reached. Projects must meet eligibility and viability requirements. More information and updates are available on the CPUC website.

LADWP’s Solar Incentive Program pays a one-time up-front payment of $1.45/W (as of February 2015) for government customer systems. Systems can be up to 5 MW, though only the first MW of capacity is eligible for incentive payments. The maximum incentive is 50% of the system cost. Incentive levels are on a 10-step declining schedule based on the amount of solar installed and connected to LADWP’s grid. See the program’s “News & Updates” page for the latest information.

Pursuant to the adoption of several key pieces of legislation, California has amended its renewable feed-in-tariff program. The new program, called the Renewable Market Adjusting Tariff (ReMAT) program, provides a performance-based incentive to customers with on-site renewable electricity generation systems up to 3 MW in size and is available to all customers of PG&E and SCE, and to public water and wastewater facilities in SDG&E territory (in addition to out-of-state customers of Pacificorp, Sierra Pacific Power Company and other utilities). The ReMAT tariff cannot be combined with any other renewable incentives that involve public funds, such as CSI, SGIP and any of the net metering programs.

A number of rebates are also available from smaller utilities throughout the state. Remuneration for non-residential PV installations is typically based on either: 1) the expected performance based incentive (EPBI), also called the standard rebate, which is an up-front payment limited to smaller installations (up to 30 kW or in some cases up to 100 kW); or 2) the performance based incentive (PBI) for installations between 30 (or 100) kW and 1 MW. The PBI pays out over the first five years of the system’s life on a per kWh basis. Rebate levels decline over time, based on the cumulative installed capacity. Federal customers should check the programs below for current availability and application periods.

In California, distributed generation systems of less than 1 MW that are net-metered and eligible for CPUC or California Energy Commission incentives for being “clean” and “super clean,” including solar, wind and fuel cells, are fully exempt from any utility exit surcharge.

Are there energy efficiency programs sponsored by the state government?

The portion of the Electric Program Investment Charge (EPIC) administered by the California Energy Commission (CEC) provides funding for applied research and development, technology demonstration and deployment, and market facilitation for clean energy technologies and practices that benefit California ratepayers.

What additional opportunities are available to me?

Federal customers whose utilities have area-wide contracts through GSA (e.g., PG&E, SDG&E, SCE, SoCal Gas, and City of Alameda), may be able to take advantage of 3rd-party financed energy efficiency projects called utility energy services contracts (UESCs). Information is available in GSA’s Energy Division Library. Federal facilities should contact their account executive to determine the level of each utility's participation

Information on California Energy Incentive Programs

The December 2011 California Energy Incentive Programs provides information on key energy issues and financial opportunities for Federal sites in California.