Governor Arnold Schwarzenegger?s support for boosting the installation of small photovoltaic (PV) systems would be a huge boon to the growing solar industry if realized, but PV and other small renewables producers may be affected by a reduction in the oversubscribed rebate program at the California Energy Commission (CEC). The commission?s emerging renewables program has turned out to be too popular for its own good, with the CEC being flooded by applications to receive the $3.80\/watt subsidy to offset the installation cost of small on-site renewables systems. As a result, the CEC may vote to lower the rebate to $3\/watt next week to extend the program?s reach to the 7,200 applicants. Earlier this year, the PV industry got a big morale boost when the governor set a goal of 50 percent of new construction to include PV systems beginning in 2005, which would be about 67,500 new homes every year. ?It is a very significant message,? said CEC commissioner John Geesman. ?It is a real, easy objective you can remember? and one the governor could be held ?somewhat accountable for,? he added. Whether the governor?s words bear fruit depends on whether he will be able to put money where his mouth is in these times of severe budget constraints. At a CEC workshop on December 11, small renewables generators presented differing views about whether the CEC subsidy should be lowered. Small wind producers noted that the PV industry has received the vast majority of the benefits of the emerging renewables rebate program, even though wind energy costs half as much. The wind energy representatives also argued that because the subsidies for wind systems are much lower, subsidy cuts hit them harder because they are on a percentage basis. But the workshop participants unanimously agreed on two things: they all opposed Southern California Edison?s proposal to tap into the pot created for small distributed generation system buy-downs, and they all applauded the CEC?s handling of the renewables rebate program begun in 1998. ?The CEC program is one of the best programs in the country,? said Jan McFarland, executive director of the California Solar Energy Association. She credited the state?s combination of rebates, net metering, and exemptions from exit fees with creating a robust retail PV industry. Her organization urged the commission to back performance-based pilot projects to increase the technology?s efficiency and lower its costs. Edison?s controversial agreement with TrueSolar approved by the California Public Utilities Commission last week has cast a dark shadow over the CEC?s program. While the proposed 5 MW commercial, centralized PV project was not opposed, small renewables proponents were hostile to using emerging renewables funds to pay for it. Under the deal, most of the $0.42\/kWh-plus cost of the project would come out of this pot, absorbing a big chunk?if not all?of the subsidies meant for small distributed- generation systems. The emerging renewables program, which has about $67 million in remaining funds, is responsible for helping to create nearly 27 MW of distributed generation, the bulk of it PV systems. It was created to boost the renewables industry and help bring down its costs to consumers. ?The bottom line is what impact [diverting CEC emerging renewables funds] would have on technology development over time and its ability to become market competitive,? said Marwan Masri, CEC deputy director of technical systems.