Clean Power
Published on October 7th, 2013
by Guest Contributor
7
Originally published on San Diego Loves Green
by Roy L. Hales
(Photo above: SunUp Energy Systems project at Tierrasanta Ridge Apartments, San Diego.)
A 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.
Ken 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.
“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.”
Tags: California, California Solar Initiative, CSI, San Diego, solar rebate
About the Author
Guest Contributor is many, many people all at once. In other words, we publish a number of guest posts from experts in a large variety of fields. This is our contributor account for those special people.
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The way to ensure that your aren’t paying more for your installation is to put the project out for competitive bid. Be sure to compare the materials quoted by asking that the bid be itemized for labor and material. Get references to ensure the quality is what the contractor says. Have someone who is experienced in PV take a look at the materials or do some research yourself on the internet. There are plenty of us out there that have been through the process. Our installing company installed our system for $6.00 per watt before incentives. They now, three years later, are installing for $4.00 per watt. Thus, some companies are dropping their price to stay competitive. Check to see what they were charging three years ago and today to see if they are staying competitive.
Finally, keep in mind that even a payback of as great as 20 years still means you are getting a 5% return on your investment when you would be lucky to get 1% from a bank and this investment carries little or no risk. If you should sell your house before the 20 years, do a Net Present Value of the savings stream out to the end of life of the equipment and increase the selling price of your house by a portion of those savings to get back more, if not all, of your investment. Make sure that the listing shows those savings to a prospective buyer.
Its so frustrating the way the rebates have been mismanaged. Keeping them at the same level until they run out is sheer madness. They should have been designed from the start, or at least redesigned as popularity surged, to gradually phase out as system prices fell and demand rose. 30% year 1 , 28% year 2, 26% year 3 so on or something like that which would see all subsidies phased out over 15 years. This would have provided stimulus for passing on further cost reduction as the subssidy fell, stretched the subsidy out over many more years and installations and avoided the need to catastrophically go from full subsidy to zero, jeopardising the entire industry. I think it is another reflection of dysfunctional US politics where each side has an all or nothing approach, there is no negotiation and compromise its all pork barrelling and protectionism. Here in Australia our REC subsidies were phased out in 5 steps over 5 years, even those steps were relatively painful leading to huge surges in demand just prior to a drop then a 3-6 month lull, a very difficult way to run and staff a business but without doubt no phase out with a drop from full subsidy to zero would have been catastrophic. However as a result Asutralia has seen a nearly 90 reduction in installed costs in the last 8 years, the US has barely seen 50%.
The reason the solar thermal is the black sheep of the solar family (even with higher eff) is that dang working fluid. Which means pumps that must be maintain. And if miss a problem before it happens, it can go very bad.
The effect of the rebates is very bad. Because the installers knew that you are going to get those rebates, they jack up their installation price.
Right now, you can get complete solar system panel for about $1/watt, including the inverters for a decent size system of 7kW and up. All you need is your labor, basic carpentry skills. Another option is to hire manual labor to help you with the physical installation. Installing solar panels nowadays is a breeze, thanks to the new designs that cuts on labor but the installers are not passing those labor savings to you, so better take advantage of it yourself. You can’t wire these wrongly because the plugs wouldn’t fit the other way, but still, with the diagrams, you should be able to install them if you know how to assemble bookshelves, chairs or tables from Ikea.
Consult a licensed electrician to help you with paperwork, final inspection, and connecting your system to the main circuit panel. This is a few hours job, and many licensed electrician can do this as their side extra earning for just $300-$500. When you add all of these up, without pricing your own labor, the system could be installed for about $1.25-$1.50 per watt without any rebates.
What is happening with installers is that they are charging you way more than this. The cheapest that I can find right now is $4/watt before rebates, netting you $2.67 after rebates. Installers are still more expensive after rebates compared to DIY without rebates. And you know that installers can really install them cheaper than you? So they get $4/watt from you, and they spend only $0.75/watt installed, netting them $3.25/watt profit or the installers give themselves big fat salaries. And then you in turn, save on paying the government $1.33/watt, with government collecting less taxes from you.
If you had installed it yourself, you get it cheaper, and you don’t need to apply for rebates, and the government can spend its money on encouraging DIY installs, helping city streamline the permitting process, pay to provide free consultation on the installation for other less-knowledgeable people. This would be money well spent.
Because the installers never really pass down the savings to you by jacking up their prices because you are going to get rebates and tax credits, what’s the use? They should lower their prices to be only slightly higher than a DIY install. As it is, they are fleecing the system. And I hope there are installers who will have cheaper prices for installations.
Something to consider is that the installers are running a business, usually employing other people, paying for healthcare/other benefits, insurance for their business, upkeep of their equipment, training, unemployment insurance, disability insurance, social security, etc. Plus, in northern states, they probably aren’t doing installations on snowy days nor rainy days, and unless they have other jobs they do as part of their business (electricians/contractors in general) they aren’t making money on those days.
I agree with you that they likely aren’t passing on all of the savings, but hopefully they are hiring additional workers, spending on advertising, keeping up to date on the latest technologies and installation processes etc. Plus, how many people are actually comfortable working on a roof? Did you know that if you hire labor/workers to work on your property, ie. putting on a new roof or installing solar, that you should/have to get insurance for them…homeowners may not wholly or in part cover a claim if they fall and break their neck. You much provide them with the appropriate safety devices such as fall prevention systems. You should have this for yourself as well when working at heights.
Finally, if you’re doing it by code, you will have to get an electrician to inspect/sign off on your work ($100-200 ?)…you will need to find someone familiar with solar PV. You will also have to have gotten a permit from your municipality and arrange for a Code Enforcement Officer to inspect. Not a big deal but takes time and effort; this may be something the installer would see to.
So yes, you can install a system yourself and I would encourage anyone mechanically inclined to do so, just know what you’re getting into. There can be many costs associated with installation that aren’t visible on the surface.
On the flip side, as more installers become trained/certified in your area, there’s nothing to say you can’t negotiate the price. As they are likely enjoying some cost savings from economies of scale and for the reasons you mention above, they might be willing to come down in price. Also, if they are in a lull but still have wages to pay, it may be favorable to them to keep some revenue coming in than nothing…can you be flexible on the timing?
Comparing DIY installing (assuming zero labor cost) with a installed system (labor included) is not really a compare.
Interesting photo showing most of the panels in the shade. Was there a reason this photo was selected?
Article source: http://cleantechnica.com/2013/10/07/solar-future-without-rebates-look-like/
Technorati Tags: diy energy, diy solar power, solar panels