What Does A Solar Future Without Rebates Look Like?

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Originally published on San Diego Loves Green
by Roy L. Hales


(Photo above: SunUp Energy Systems project at  Tierrasanta Ridge Apartments, San Diego.)

recent article in the San Diego Business Journal stated, “Many of the incentive programs that have helped California – and San Diego in particular – lead the nation in solar installation projects are quickly running out. Thanks to the stunning popularity of adding rooftop solar panels to homes and businesses, the incentive programs are being depleted of cash earlier than projected.”

Three hundred and seventy-nine of San Diego’s businesses have taken advantage of California Solar Initiative (CSI) rebates to go solar, which makes San Diego County second only to LA in the total number of applicants. Yet, with the rebates drying up and the impact of Bill AB 327 still unknown, there is a danger that “the solar rooftop market (could come) to a screeching halt.”

Only the article did not correspond to some of the comments we’ve been hearing recently, so I decided to solicit more opinions from within the industry. Two of the responses that came in were much as I expected. The third, from someone who works with  Solar Thermal, opened  my eyes to an often overlooked sector of the solar industry.

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KenHeadshotKen Justo, of ASI Heating, Air & Solar, pointed out that, “CSI rebates have not been funding residential homeowners for at least the past six months and demand continues to grow with increased utility rates. These were great programs to get the ball rolling but we are now moving forward without them.”

“I do not believe the loss (of these incentives) will slow down installations over the next three or four years providing AB 327 does not affect net metering or create other obstacles for residential solar customers.”

Mike Teresso, President of Baker Electric Solar, added that, “At Baker Electric Solar we are ALL FOR incentives, yet a strong rate of return on investment still exists for home solar adopters without them at this point. The California Solar Initiative (CSI) rebate has diminished for single-family residential projects in San Diego, but it will continue to impact commercial solar and make it more viable. We believe it’s important for government incentives to continue to support new solar customer’s efforts to go green. As the nation’s solar leader, California has major renewable energy goals to reach. The federal Investment Tax Credit (ITC) incentive for solar continues to drive a strong ROI for both residential and commercial customers — under the current law, the ITC will remain in effect through December 31, 2016. We expect to see government at every level continue to support our nation’s renewable energy future with policy, as well as investing in incentives to continue to promote solar energy adoption.”

The strongest argument for continued incentives came the Solar Thermal (hot water) sector. Solar Water has been in use since the 1920′s – and a plethora of multi-family buildings, hotels, motels, spas, car washes and those in food service use it – but  it is sometimes called the step-child of PV. It does not have the same charisma. People who use it do not see their meters spin backward, as happens when PV modules are generating power through the day. Consequently, Solar Thermal sector has not received the same rebates/incentives enjoyed by PV. The irony being that – according to  Alistair Win MacCabe, Senior Project Developer for SunUp Energy Systems – Solar Thermal has 65-80% efficacy compared to PV’s 20%!

“I have been in this industry on and off for 35 years,” MacCabe said. “The mid 80’s crash occurred because there was no warning of the elimination of the tax credits. The recession high jacked the early years of the CSI rebate program. This time round we have at least a window to prepare. This should allow for the volume of sales to force the reduction of price which it has on the PV side.

“Still the biggest impediment to widespread adoption without incentives is the hodgepodge of local regulation, permitting, zoning and lack of code uniformity. The Solar PV industry should be commended for it’s better than predicted success.

CityViewSanDiego976x800“Unfortunately, as has been the case historically, Solar not divided into or distinguished by its two radically different parts: PV and Solar Thermal (Hot Water). Solar Thermal for commercial applications is still in the 1sttier of CSI rebates and those are up to 60% of cost. There are still Millions available statewide under CSI for that purpose. Solar Thermal has 65-80% efficacy compared to PV’s 20%. Solar Thermal has a ROI without incentives of 5-7 years and with rebates sometimes under 2 years. Compare that to PV of 7-20 years. Solar Thermal is not beholden to the grudging generosity of a utility tie in order to gain benefit. Solar Thermal should be the First Solar choice not the last, even with low gas prices which will not remain long term. Israel mandates solar thermal (I’m not in favor of mandates) because they know with mass deployment how effective it is on a national scale.

“As we all know in the renewable industry, if we got even a fraction of the hidden financial support the utilities and the oil and gas industry get from government, we as a county could wean ourselves from imported oil and create a healthy economy. CSI, the Utilities and local government have failed to support the most effective Solar in their rush to get on the Solar bandwagon in supporting PV. Solar Thermal should be a Multi-Billion dollar industry in California alone.

“Now that the PV revolution has been unleashed, the Utilities are up to their old rear guard tricks in the form of AB 327. We can still get there but Solar must be promoted for both PV and Thermal. On Bill Financing through the Utilities by 3rd party financing has now been approved by the CPUC. That should give another impetus to allow implementation of Thermal and PV. Solar Water Heated by the Sun.”

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