The solar industry and some of its commercial customers worry that tying photovoltaic incentive payments to energy efficiency too tightly under California\u2019s Million Solar Roofs program could kill the solar market for large commercial buildings. The energy efficiency requirement is proposed in draft California Energy Commission guidelines for administering the $3.3 billion in incentive payments under SB 1. The law authorized the state\u2019s Million Solar Roofs initiative. \u201cWe have to be very careful not to let energy efficiency become the rock in the stream that prevents solar programs from going forward,\u201d said Joseph Venne, Macy\u2019s West vice president. Earlier this summer, Macy\u2019s struck a deal with SunPower to install solar systems on 26 of its stores in California. However, Bernadette Del Chiaro, Environment California clean energy advocate, said that the CEC \u201cis very close to walking that appropriate line\u201d between creating a mainstream solar market and achieving improved energy efficiency. To qualify for state incentive payments under the draft CEC guidelines, owners of commercial buildings bigger than 50,000 square feet would have to \u201cretro-commission\u201d their energy systems. That would entail upgrading air conditioning, heating, lighting, and other electricity consuming equipment to meet current efficiency standards. This would dissuade many companies from going forward with installing solar systems because of the expense and complications of budgeting for the unknown expenditures, said Venne at an October 4 workshop on the draft guidelines. Julie Blunden, SunPower vice president, called the energy efficiency retrofit requirement \u201ca high hurdle\u201d for commercial building owners. The guidelines also would tie energy efficiency to any solar incentive payments for new homes and commercial buildings, said Claudia Orlando, CEC building and appliances energy specialist. To specifically qualify for the payments, builders of new homes and commercial buildings would have to exceed Title 24 energy performance standards and install Energy Star appliances. Payments for solar systems on existing homes and smaller commercial buildings would be tied to energy efficiency improvements as well, but to a more limited degree, explained Orlando. The guidelines also would establish performance standards for the incentive payments linked either to actual production of electricity or based on calculated energy production using 15 different factors. Installations in sunnier locations would qualify for higher incentive payments. The CEC plans to issue final proposed guidelines by November 19. The commissioners are expected to adopt final guidelines at their December 19 meeting. SB 1 requires the agency to adopt the guidelines by January 1, 2008.