The Up-Front Incentive, also known as UFI, refers to a single, one-time incentive payment. This payment is calculated based on the capacity of the Customer System or the estimated energy kilowatt-hour (kWh) production, whichever is applicable. Unlike other incentives, the UFI is not determined by the measured system output.
California, New Jersey, Nevada, New York, Hawaii, Connecticut, Oregon, and Massachusetts have already adopted the UFIs. The customer will receive payment upon the successful completion of all program requirements. APS will receive ownership of all Renewable Energy Credits (RECs) generated by the customer’s system in return for the incentive.
The maximum amount of up-front incentives available for the project is 50% of the total project costs, with a cap of $75,000. Incentive amounts are determined by customer rate class, technology, and application. Not every technology is eligible for up-front incentives.
Also See: What are Solar Tariffs?
Features of Up-Front Incentive (UFI)
- Certain providers stipulate that the buyer must cover a minimum of 15% of the total cost, even after factoring in all incentives.
- Incentives can vary from a generous $5 per watt to a more modest rate of $1.45 per watt.
- UFIs are usually only suitable for small-scale systems, typically ranging from 10 to 100 kW, and certain programs may also have dollar limits.
- Utilities typically set limits for the UFI, which range from 30% to 60% of the overall system cost. The specific limit may vary depending on the utility and location.
UFIs Vs PBIs
There are two ways to structure incentive payments: up-front incentives (UFIs) and performance-based incentives (PBIs).
When a system is installed or starts operating, generally UFIs are paid all at once. On the other hand, PBIs are compensated incrementally and are determined by the measured output of a system.
State incentive programs frequently offer UFIs to smaller systems while providing PBIs to larger systems owned by commercial entities. A UFI can also help reduce the initial expense of small systems.
Also See: What is Real-Time Pricing (RTP)?