The California Energy Commission is poised to launch a $10 million pilot performance-based incentive program for investments in small solar-powered systems in January. The plan comes on the heels of the Schwarzenegger administration?s announcement that it is committed to a massive photovoltaic rooftop deployment following the defeat of the ?Million Solar Homes? bill belatedly backed by the governor (<i>Circuit<\/i>, October 22, 2004). The advantage of the performance-based incentive program is that it ?encourages maximizing generation? and benefits the development of renewables, according to Marwan Masri, CEC deputy director of technology systems. The commission advocated moving away from rebates and to incentives in its recently released Integrated Energy Policy Report Update. Germany, one of the world?s renewables leaders, uses a performance-based photovoltaic program that has been very successful, Masri said. The CEC hopes to find out through this pilot project whether this incentive approach will work in California. Germany?s recently reauthorized renewable energy law has pushed demand for PV installations to sky-high levels (<i>Circuit<\/i>, June 18, 2004). One unknown is whether California consumers will retain their enthusiasm for solar installations once up-front rebates are replaced with payments for systems that depend on performance. Annual PV subsidies that currently provide $3.00\/watt for small systems are very popular, and the Energy Commission program providing them has been oversubscribed. Thus, $60 million was shifted from 2007 ratepayer-funded renewables programs to fund rebates this year. This extra funding, however, is expected to run out by the end of December, Masri noted. Money for the solar pilot program comes from a separate funding pot earmarked by SB 1038, which mandated funding for renewables programs. The solar pilot will be open to residential and commercial applicants.