As conventional rebate programs fade, performance-based incentives may become the name of the game for California?s solar industry, according to a Sacramento Municipal Utility District official. The aim is to shift current subsidies from lump-sum rebates to ongoing payments per kilowatt-hour. ?I?d like to think about it as a power-purchase agreement,? said Mike Keesee, SMUD energy specialist. He said the muni plans to offer a pilot program by summer, speaking at a February 23 conference cosponsored by Anaheim, the Rahus Institute, and the California Solar Center. SMUD is targeting commercial customers that have a strong incentive to conserve energy due to peak-period charges of as much as 14.7 cents\/kWh in the muni?s territory. Unlike residential customers, Keesee noted, they also are positioned to take tax breaks on systems, such as accelerated depreciation. Interest in performance-based incentives is growing in California in response to Germany?s solar incentive program, said Tor Allen, director of the Rahus Institute (<i>Circuit<\/i>, May 18, 2004). There, utilities pay up to 80 cents\/kWh for photovoltaic power. Performance payments avoid concerns about systems? efficacy. Anaheim, for instance, found that to keep its growing array of solar installations performing properly, it has had to contract with a company that regularly checks and cleans them, said Dina Predisik, Anaheim distributed-generation program manager. SMUD?s effort to develop new incentives follows the introduction last month of a $10 million statewide performance-based incentive pilot program by the California Energy Commission (<i>Circuit<\/i>, Jan. 21, 2005). The CEC will pay 50 cents\/kWh for three years up to a maximum of $400,000 per project. However, there have been no applicants for the program, according to Bill Blackburn, emerging renewables program lead. Interest in shifting the basis of photovoltaic incentive programs comes as the state is reducing rebates under its emerging renewables program by 20 cents per watt every six months. ?This year is a real crossroads for going forward,? said Rahus?s Allen. ?We?ve maxed out a lot of the solar incentive programs.?