Some stakeholders continue to voice concerns about the performance of customer-sited photovoltaic (PV) systems, particularly because these systems typically receive financial support through ratepayer- or publicly-funded programs. Although much remains to be understood about the extent and specific causes of poor PV system performance, several studies of the larger programs and markets have shed some light on the issue. An evaluation of the California Energy Commission (CEC)'s Emerging Renewables Program, for example, found that 7% of systems, in a sample of 95, had lower-than-expected power output due to shading or soiling (KEMA 2005). About 3% of a larger sample of 140 systems were not operating at all or were operating well below expected output, due to failed equipment, faulty installation workmanship, and/or a lack of basic maintenance. In a recent evaluation of the other statewide PV incentive program in California, the Self-Generation Incentive Program, 9 of 52 projects sampled were found to have annual capacity factors less than 14.5%, although reasons for these low capacity factors generally were not identified (Itron 2005). Studies of PV systems in Germany and Japan, the two largest PV markets worldwide, have also revealed some performance problems associated with issues such as shading, equipment and installation defects, inverter failure, and deviations from module manufacturers' specifications (Otani et al. 2004, Jahn & Nasse 2004). Although owners of PV systems have an inherent incentive to ensure that their systems perform well, many homeowners and building operators may lack the necessary information and expertise to carry out this task effectively. Given this barrier, and the responsibility of PV incentive programs to ensure that public funds are prudently spent, these programs should (and often do) play a critical role in promoting PV system performance. Performance-based incentives (PBIs), which are based on actual energy production rather than the rated capacity of the modules or system, ...