Frequently Asked Questions About the
New Solar Homes Partnership (NSHP) Program



What is the New Solar Homes Partnership (NSHP) and when did the program start?


The NSHP is part of Governor Arnold Schwarzenegger's California Solar Initiative (CSI). The NSHP merges the goals of energy efficiency and solar production to accomplish the installation of 400 megawatts (MW) of solar electric systems on energy efficient new homes in California over the next ten years. The Energy Commission will partner with builders and developers to create a self-sustaining market for solar homes that incorporate high levels of energy efficiency and high-performing systems on 50 percent of new homes by the end of that period. The NSHP program will target new residential construction, both single family and multi-family, including affordable housing. The NSHP provides incentives based on the system's expected performance plus technical and market support for builders participating in the program. The program officially began on January 2, 2007.



Who is eligible for incentives?


Eligible applicants are builders and developers who install qualifying solar electric systems on new, highly energy efficient residential buildings that are served by Pacific Gas and Electric, Southern California Edison, San Diego Gas & Electric, and Bear Valley Electric utilities (i.e., California's investor-owned utilities). Homes that are served by publicly-owned utilities (sometimes called municipal utilities) are not eligible for the NSHP program. Builders of new residential buildings served by publicly-owned utilities should contact those utilities for information about similar programs.



Why is there such a high emphasis on energy efficiency?


California energy policy places great emphasis on energy efficiency because it is the most cost effective means to meet California's energy and environmental needs. In establishing the NSHP, the Energy Commission aims to ensure that new residential buildings that are granted an incentive under the NSHP are significantly more energy efficient than required by the California Building Energy Efficiency Standards (Title 24, Part 6). This helps the combined energy efficiency and solar project to be as affordable as possible over the life of the home.



What energy efficiency levels are needed to qualify for the program?


Residential buildings must achieve an Energy Commission specified level of energy efficiency beyond the Title 24 Standards to be eligible for incentives for solar systems. Participating residential buildings are required to meet one of the tiers of energy efficiency shown below:

Tier I - 15 percent reduction in the residential building's combined space heating, space cooling and water heating energy compared to the current Title 24 Standards.

Tier II - 35 percent reduction in the residential building's combined space heating, space cooling and water heating energy and 40 percent reduction in the residential building's air conditioning energy compared to current Title 24 Standards.

The Tier I level is a minimum condition for participation in the NSHP. The Tier II level is intended to differentiate builders who make greater commitment to energy efficiency, aiming for immediate positive cash flow to homeowners and to encourage builders to move towards zero energy new homes. The Tier II level is consistent with what is being accomplished by California builders participating in the national Building America program.

In addition, for either Tier I or II, each appliance provided by the builder must be ENERGY STAR if an ENERGY STAR designation is applicable for that appliance.

Contact a Certified Energy Plans Examiner (CEPE), certified by the California Association of Building Energy Consultants (CABEC), to evaluate building plans and suggest a menu of energy efficiency options to attain Tier I and Tier II levels. You must have a CEPE complete and certify energy-efficiency documentation for the NSHP and utility new construction energy efficiency programs.

California's investor-owned utilities are expected to provide substantial incentives to builders commensurate with the energy savings resulting from each Tier.



What type and size of technology is eligible?


A solar photovoltaic (PV) system that achieves the direct conversion of sunlight to electricity is the only eligible technology to receive financial incentives. Eligible equipment must be tested and certified in accordance with the Energy Commission's requirements. Eligible systems must be sized so that the amount of electricity produced offsets part or all of the customer's electrical needs at the site of installation. Systems 5 kilowatts (kW) or less are assumed in compliance with being sized to serve on-site electric load. For systems greater than 5 kW, the expected performance of the system must not exceed 100 percent of the expected electrical generation needs at the site of installation. See Appendix 2 of the NSHP Guidebook for further details on how to determine the maximum system size eligible for incentives. The minimum size of an eligible system is 1 kW AC. Equipment purchased or installed more than 24 months before applying for NSHP incentive is not eligible.



Where can I purchase eligible equipment?


A list of registered retailers is available online. Companies who sell system equipment must be registered with the Energy Commission. To participate, information on form NSHP 4 must be submitted before a company can become eligible. See the Forms page for a copy of the NSHP 4 form.



How much are the incentives?


There are two incentive levels available:

1. Base incentive: the Expected Performance-Based Incentive (EPBI) amount is $2.50/watt. The base incentive applies to custom homes, small developments (less than six homes), reservations where solar is identified as an option, and all residential applications where solar will be installed on less than 50 percent of the homes in a development. The actual incentive for a particular system and installation is dependent on the EPBI calculation of the system's performance compared to the reference system.

2. Production housing with solar as a standard feature incentive: the EPBI amount for new homes offering solar as a standard feature is $2.60/watt. To qualify, the builder must commit at the reservation stage that a minimum of 50 percent of the homes/dwelling units in the subdivision or multi-family housing development with 6 or more homes/dwelling units will have solar systems that meet or exceed the California Flexible Installation criteria (see below for more info). The actual incentive for a particular system and installation is dependent on the EPBI calculation of the system's performance compared to the reference system.



How long will these incentive levels be available?


The NSHP is a ten-year program designed to increase the demand for solar and to ultimately lower the cost of solar as production is increased. Legislation requires the incentives to decline over time, as program participation increases, and eventually decline to zero by the end of the program. A ten percent decline in the incentive rates will occur each time a capacity goal has been achieved (in MW). The Energy Commission will provide a public notice when there will be a change in the incentive levels. The new incentive levels will be effective 30 days after the public notice. More specifically, the first $0.25 decline will not occur until 15 MW of reservations have been received. Please refer to the NSHP Guidebook for more information on incentive declines and volumetric targets.



What is the Expected Performance-Based Incentive (EPBI) and how is it calculated?


The EPBI is the method used to calculate the NSHP incentive. The EPBI calculation accounts for specific performance characteristics, including when the power is produced, detailed module and inverter efficiencies, a default estimate of expected system power losses, module orientation, tilt and mounting type, shading, and geographic location. The EPBI payment is determined through the use of the Energy Commission's PV Calculator.



What is the PV Calculator?


The PV Calculator is a calculation program that estimates the electrical output of the PV system based on the type and number of modules and how they are configured into arrays, the type of inverter, the orientation and tilt of the modules, and the extent of expected future shading due to the current and planned obstructions including the mature heights of planned trees. The PV Calculator relies on libraries of the tested and certified performance characteristics of eligible equipment and files of weather data and hourly time dependent valuation (TDV) weights maintained by the Energy Commission. The PV Calculator and instructions are available online.



What are the California Flexible Installation criteria?


The NSHP allows determination of expected performance using the California Flexible Installation criteria, which bases the estimated performance on an estimate of the performance for a range of module orientations and tilts. The California Flexible Installation criteria applies to all solar systems that are installed with an azimuth ranging from 150¡ and 270¡ and all modules installed at the same tilt as the roof slope for roof pitches between 1:12 and 7:12. The PV Calculator allows the user to choose the California Flexible Installation criteria for easy input and easy compliance. For each system on each building that has the expected performance based on the California Flexible Installation criteria, the Home Energy Rating System (HERS) rater must verify that the modules are installed with any azimuth and with any tilt within the acceptable range. Note that in order to use the California Flexible Installation criteria, each solar system on each site must meet the "minimal shading" criterion.



What is the "minimal shading" criterion?


Shading of the solar electric system is potentially the most critical problem to avoid over the life of the system to ensure high performance. Shading can be caused by 1) obstructions that exist at the time of the installation of the system or 2) obstructions that occur through the maturation of trees or the subsequent construction of neighboring structures. To protect California's investment in solar systems and to ensure homeowners get what they paid for, it is critical to avoid both types of obstructions. The "minimal shading" criterion is designed to do this.

The "minimal shading" criterion is that no obstruction is closer than a distance ("D") of twice the height ("H") it extends above the PV modules. Any obstruction that projects above any portion of the PV array must meet this criterion for the PV array to be considered minimally shaded. Obstructions that are subject to this criterion include any vent, chimney, architectural feature, mechanical equipment or other obstruction that projects above the roof of the residential building with the installed solar system, any part of the neighboring terrain that projects above the roof of the residential building, any tree that is mature at the time of installation of the solar system or any tree that is planted or planned to be planted as part of the landscaping for the residential building (the expected performance calculation must be based on the expected mature height of any tree planted or planned to be planted as part of the landscaping for the residential building), any existing or planned residential building or other structure neighboring the residential building with the solar system and any telephone or other utility pole that is closer than thirty feet from the nearest point of the array. See Appendix 4 of the NSHP Guidebook for more information about how to meet the "minimal shading" criterion and how to account for shading that fails to meet the "minimal shading" criterion in the expected performance calculation.



Does the system need to be interconnected with the utility?


Yes. The applicant will need to apply to their electric utility to receive authorization for interconnection. Note that only PG&E, SCE, SDG&E and BVE are eligible to participate in the NSHP program.



What are the reservation periods?


An 18-month reservation period will be granted to builders that are eligible for the base incentive. A 36-month reservation period is available for qualifying developments (i.e., where builders commit to installing solar on 50 percent or more of homes in development) and affordable housing applications.



Can I get a time extension?


No time extensions will be granted to reservations that are approved under any circumstances.



Does the program require a warranty for the equipment?


Yes. All systems must have a minimum ten-year warranty provided in combination by the manufacturer and installer to protect against defective workmanship, system or component breakdown, or degradation in electrical output of more than fifteen percent from their originally rated electrical output during the ten-year period.



Why does my PV system need to be field-verified?


Installed systems must be third-party field-verified to ensure the installation of high performance PV systems that are consistent with the information used to determine the estimated performance, reservations, and ultimately the final rebate.



Can my installed system be different than my reservation?


The Energy Commission expects a system to be installed as described in the Reservation Application Form (NSHP-1) but recognizes that changes may occur during installation. Changes do not require prior approval, but must be documented on the Payment Claim Form (NSHP-2) and may change the rebate amount. Changes that result in a lowering of the expected performance of a system, and thereby lowering rebate amounts are allowed. However, any change that increases the expected performance of a system, and thereby increases the rebate amount is subject to availability of funding and approval by the Energy Commission. The builder may receive the incremental increase in the eligible rebate at the time the claim is received. Modifications to an approved reservation may be made prior to a payment claim or when the complete payment claim is submitted. When a modification increases the expected performance of the system, a new incentive amount will be calculated based on the time a modification request (with supporting documentation) is deemed complete. If reservations at that time exceed available funding, the incremental increase in expected performance will earn the rebate amount in effect at the time of the modification.

If any system change occurs or it is determined by the field verification that the expected performance falls below that used in the reservation, the rebate is based on the lower expected performance. If any system change occurs or it is determined by the field verification that the expected performance is above that used in the reservation, the applicant may complete the Rebate Payment Claim Form based on the higher performance (subject to the available funding stipulation and eligibility for a higher rebate).

If the applicant uses the "California Flexible Installation" criteria and the minimal shading criteria, the builder may complete the Rebate Payment Claim Form using the expected performance used for the reservation as long as the orientation, tilt and minimal shading criteria are determined to be met by the field verification. The applicant also has the option of recalculating the rebate based on the actual orientation and tilt of the system as determined by the field verification. If the field verification determines that the "California Flexible Installation" criteria and the minimal shading criteria are not met, the expected performance will be re-calculated based on the actual orientation, tilt and shading.



How does the Energy Commission treat systems installed by sellers or contractors on their own new home?


PV system sellers or contractors (e.g., retailers, wholesalers, and manufacturers) may not sell a system to themselves. To receive an incentive, a purchase agreement (or proof of purchase) must be between the builder and the system supplier. The supplier must be identified as the seller on the application form and must be registered with the Energy Commission. Documentation of a purchase between two principals or owners within the same entity or between spouses is not acceptable, nor is a purchase agreement signed by the same individual.



Can builders add to their existing systems?


Once rebates are paid, changes to expand or otherwise improve the expected performance of a system(s) are not eligible for NSHP funding. Residential dwelling owners may apply to the California Solar Initiative (CSI) Program overseen by the California Public Utilities Commission. See the CSI Program for additional information, including program administrators for their location.



How do I apply for incentives?


Mail a completed reservation application form with required attachments to:

NSHP Program, Reservation Request
California Energy Commission
1516 9th Street, MS-45
Sacramento, CA 95814-5512



How do I contact the NSHP Program?


For inquiries about the NSHP Program, please call the toll-free hotline (within CA) at 1-800-555-7794 or e-mail to renewable@energy.state.ca.us