If California commits to a hefty expansion of subsidies for residential photovoltaic rooftop systems, the resulting economies of scale will lower PV costs, reduce volatility in the energy market, and provide air-quality benefits, according to a December 13 report by California Environment. The group?s report was made public the same day the Schwarzenegger administration released a modified outline of its initiative embracing massive photovoltaic deployment over the next decade on both homes and commercial buildings. The revision of the administration?s 1 million rooftops proposal, although short on detail, aims to produce 3,000 MW of converted sun power. While legislation to enact the plan failed this year, bipartisan action is expected to resurrect it in 2005. The administration?s proposal including both the residential and commercial sectors was warmly embraced by solar system businesses. State policy should ?not dictate to one sector but support the industry and let the market forces decide the rest,? said Janice Lin, vice president of PowerLight. Looming questions are how the costs of the solar incentives would be allocated and whether supply could meet potential demand in the state. If the revised legislation?which would affect more than residential buildings?becomes a reality, manufacturers say they can meet demand. This past summer, PV manufacturers were caught short as huge and more profitable demand in Germany and Japan caused photovoltaic producers to direct their supplies overseas (<i>Circuit<\/i>, June 18, 2004). If the solar rooftops measure were enacted, ?the market would ramp up in response to market certainty and would inspire local manufacturers to expand,? PowerLight?s Lin said. ?We definitely would use it as justification for stepping up production,? added Marc Cortez, market director for Sharp. Last month, the company doubled its capacity at its Memphis, Tennessee, plant to 40 MW, he said. Further expansions could occur in a matter of months by retooling other assembly lines. Increasing production to meet the demand from retrofits and new construction in California is estimated to take between 12 and 24 months. Raju Yehamndar, director of sales for Shell Solar, the largest manufacturer of solar modules, added, ?Collectively we can meet the challenge.? Also this week, Kyocera Solar announced that its new solar modules assembly plant in Tijuana, Mexico, is on line. Next year, the facility is expected to reach an annual production capacity of 36 MW of PV rooftop panels, according to a company press release. The administration proposes installing solar systems on half of new homes by 2018, as well as on the roofs of commercial and residential buildings. In addition, incentives such as tax breaks, rebates, and net metering would be expanded. Senator Kevin Murray (D-Los Angeles), who authored the Million Solar Homes bill that never made it to the governor?s desk, is working on legislation that would again set a million-rooftops goal (<i>Circuit<\/i>, Aug. 27, 2004). The legislation, SB 1, coauthored by Senator John Campbell (R-Costa Mesa), is expected to reflect the administration?s goals. Assemblymember Lloyd Levine (D-Van Nuys) said he would introduce a similar bill in the new year. According to California Environment?s report, the installation of a 2.5 kW photovoltaic system priced at $6.00\/watt ?can be expected to generate net economic benefits for new homeowners in nine of California?s fastest-growing municipalities with a buy-down of $2,800 per kW.? This incentive is proposed for new homes in nine cities, including Bakersfield, Chula Vista, Irvine, Long Beach, San Jose, Rancho Cucamonga, and San Diego. Some suspect the $6\/watt price may be low. California Environment?s report is available at <i>www.californiaenvironment.org<\/i>.