Last week LADWP responded to its critics by announcing major changes in how its solar program works. In a widely distributed press release, LADWP said its actions were “aimed at reducing delays, streamlining the program, and increasing transparency." Or in other words, providing participants with some hope that one of the most difficult jurisdictions in which to install solar might finally have a chance to live up to its potential. Here’s our take.
There can be no doubt that LADWP is in serious need of improving how its solar program works. Indeed, earlier this month we wrote a piece about Why “Soft Costs” are so Hard (particularly in LADWP territory) and in January we wrote in LA: Where Good News goes to Die, how the LA Department of Building and Safety insisted upon adding their own, entirely redundant, testing regime on new solar products, thereby delaying their introduction in the City, even though those products were UL listed and approved for use everywhere else in the State of California by the California Energy Commission.
At the time we appealed to LA’s new major to fix this:
We suspect that the Garcetti Administration could make this go away tomorrow—so why don’t they? Given the Mayor’s claim to green cred, why not call a meeting with appropriate stakeholders: installers (including small installers), manufacturers, and department heads and lets cut through this unnecessary nonsense and make it easier to install rooftop solar in the biggest city in the biggest solar market in the country. It’s about time.
Now we have no idea whether anyone at LA City Hall reads this blog, and we are certainly not the only folks who have been speaking out about the problems in LA, but last week’s announcement does appear to have picked up on these themes. Here’s how LADWP’s new General Manager framed the issue:
“We recognize that our solar customers have become frustrated with longer than normal response times and the challenges of navigating through the application, review, inspection and rebate processes to receive the incentives and turn on their solar systems,” said LADWP General Manager Marcie Edwards. “We want to make it easier for customers to go solar so they can benefit from the city’s abundant sunshine by controlling a portion of their electricity costs, while helping to green the grid.”
To which we say, bravo, but the devil is in the details.
So what exactly is LADWP promising to do? Quite a bit, apparently, including (from the press release):
- Doubling the number of staff to expedite processing applications and issuing rebate checks.
- Hiring new staff members on a permanent basis to improve response times to hotline calls
- Streamlining the lease application review process
These are all good steps, but if folks who are brought in to review applications don’t understand what they are reviewing, then simply having more bodies will not improve the process. Maybe DWP could bring some actual installers into the training process. Why not pay them to sit down with your new hires and go over the materials being submitted via PowerClerk so that there could be a better understanding of what those materials mean? I’m guessing you could get some volunteers to assist with this process, for a price, and that would improve things for everyone.
In any event, to help increase the transparency of these efforts, DWP is also creating what they are calling “two Mayor’s Dashboards to keep customers informed of the progress and improvements” to the program. These dashboards are to be updated weekly—here is a portion of the dashboard as of March 24:
This shows that the delay in getting a rebate reservation reviewed is presently two months or 56 days—which would in and of itself be a significant improvement on the 78 days we recently endured. By the end of April, DWP is hoping to shave another week off of that and by the end of May to have cut it all the way down to just three weeks, which would bring DWP in line with its neighbors in SCE territory.
Unfortunately for those unhappy customers awaiting a rebate, your delays will get worse before they get better, with payments taking a full quarter of a year by the end of April. Ouch.
The announcement was not confined to just improvements at LADWP, apparently Building and Safety is also getting into the act. Again, from the press release:
Concurrently with efforts being made at LADWP, the solar permitting process at the Department of Building and Safety is being streamlined and simplified, with the vast majority of residential permits soon to be available online and additional training of field inspectors to deliver consistent and timely customer service.
These efforts are expected to save solar installers – and their customers – hundreds of dollars on solar PV systems by reducing trips to DBS for simple permits and ensuring that inspection issues are dealt with promptly. As this streamlining process moves forward, DBS will work with industry stakeholders to continuously deal with the introduction of new technologies in this rapidly evolving sector.
Heavens, be still my heart! Who knows, perhaps someday soon we will be able to skip the whole, “LA has to test everything itself just because it can,” phase and be allowed to deploy best-in-class technology as those products become available on the CEC list—just like we now can in every other jurisdiction. (Along those lines we have heard that the Enphase M250 has been approved and that the final certification should issue shortly. Finally.)
All and all, these are very encouraging noises coming from the City of Angels, and we can only hope at this stage that positive changes will match the promising rhetoric. We will be waiting to see… watch this space.
Everyone in the solar industry is focused on soft costs—that is all the extra expenses that are rolled into the cost of installing a solar power system. Since prices for solar modules have dropped to below a dollar/Watt, the percentage of an overall system price consumed by soft costs continues to increase. But soft costs are really hard to reduce and we just had a painful example to help drive that point home.
One of the most pernicious of the soft costs are those associated with getting approvals from the Authorities Having Jurisdiction (AHJs) over the project. That includes both the utility that must approve any rebate application and interconnection agreement, as well as the local building and safety department which must issue the permit and inspect the project. The requirements for approving a solar power system vary considerably from jurisdiction to jurisdiction and that lack of standardization—combined with just plain arbitrariness that runs rampant in some places—means long, pointless delays in moving projects forward.
We are working on a medium-sized residential project in Los Angeles. If we were doing this in Pasadena, it would be installed by now, but as everyone knows, LA isn’t Pasadena. We submitted the requested materials for reserving the rebate on this project on December 3 of last year and then sat back while we waited to hear from them. Weeks went by without a peep—while we reassured our client that we would update them as soon as we heard something.
Then, finally, we did. On February 19th, seventy-eight days after we submitted the application, we got an email telling us that the application was “incomplete” and that:
If you fail to submit the requested documentation by the above date your incentive application will be subject to cancellation without further notice.
(It really was in red type.) How long did they give us to respond? Two weeks. In other words, we get less than one fifth of the time that LADWP took to, in its sole discretion, identify “deficiencies", to cure those deficiencies.
If that wasn’t bad enough, LADWP adds insult to injury by sending a copy of the “deficiency” email to the client! Pity the poor client—they have picked a contractor, signed a bunch of paperwork, and made a down payment, all months ago with nothing to show for it, and then they get an email that suggests for all the world that their contractor has botched things and their project is about to go south! How helpful.
So now the contractor has to spend time reassuring the client that despite the dire tone of the email, everything will be ok. Then you spend more time addressing the “deficiencies” that have caused all the ruckus in the first place.
I won’t bore you with the entire litany of nonsense that we were asked to cure, but my favorite one was this: when you submit information about the system online, you are supposed to show the cost of modules, the cost of the inverter(s) and the balance of system (BoS) costs. You are also required to submit a copy of your contract for the sale. This we did. But they complained that the contract price and the system price entered online did not agree. Now here’s the thing, once you submit the rebate application to LADWP you can no longer see those details, so the contractor has no way to know where this “error” came from. So, with no other options, you tell them that the contract is the controlling document as to the system cost so they should use that.
Instead, they send out yet another email, this time with the scary heading: “FINAL NOTICE” (yes, all in caps) with the following declaration:
The Los Angeles Department of Water and Power (LADWP) has received your Solar Incentive Program application, and it is still incomplete.
And yes, they send a copy of this email to your client as well.
Now if they had actually read the contract they would have understood that the discrepancy is due to the rebate amount itself. Online, the total cost reflects the price before rebate. But because we front the rebate for our client, the contract price is net of the rebate amount. (The contract itself spells that all out, of course, but then LADWP would have to actually read the contract.) We thought about explaining this before coming to our senses and realizing that was a lost cause. Instead, we created a letter requesting that they modify the online data to reduce the BoS amount by the rebate, and uploaded that to their system. Voila, just like that, they reserved the rebate.
By my count, it took eight emails to get this resolved.
Just about everything about this interaction is wrong. The delay in the initial contact is wrong. The tone of the email sent out is wrong. The absurd disparity between the timing LADWP allows itself versus that to the contractor is wrong. And the lack of understanding of what they are reviewing is infuriatingly wrong. It builds in delays and costs to deal with those delays. It is what makes soft costs so damn hard.
It needs to change.
Solar rebates are fleeting in many locations—now you see them, now you don’t. Case in point, Burbank Water and Power (as is the case with its cousin in Glendale) is notorious for offering, and then taking away solar rebates. We monitor BWP’s website for new developments, and we have now learned that they will be holding a lottery for possible rebate funds next July. No additional details were made available; presumably they will be posted sometime in June.
Given that development, we decided to update our overall rebate status. Here is how things stand generally in the Run on Sun service area as of this date:
|Utility||EPBB ($/Watt)||PBI (¢/kWh)|
|(Click to see website)||Residential||Commercial||Non-Profit||Residential||Commercial||Non-Profit|
|Anaheim||Unavailable until June, 2014||Unavailable until June, 2014|
|Azusa||Wait List||Wait List|
|Burbank (BWP)||Lottery in July, 2014||Lottery in July, 2014 (30 kW or less)|
|Glendale (GWP)||Unavailable until 7/1/2014||Unavailable until 7/1/2014|
|Los Angeles (LADWP)||$0.40||$0.70||$1.45||Not used|
|SoCal Edison (SCE)||$0.20||$0.25||$0.90||2.5¢||3.2¢||11.4¢|
Here are a couple of very important qualifications to what appears in that table:
This is a moving target; watch this space.
UPDATE - We just learned that the Board hearing to discuss changes to the Solar Incentive Program has been rescheduled to Wednesday, June 19th at 9:00 a.m. (Still at DWP HQ on Hope Street in downtown LA.) We will not be able to attend due to a prior commitment with the USC Solar Decathlon team. Anyone who does attend, feel free to pass on our thoughts below to the Board.
Solar is a great fit for non-profit organizations - environmental awareness and good stewardship of resources go hand-in-hand with the mission of churches and schools. But because non-profits are unable to take advantage of tax incentives, their sole sweetener for going solar are utility rebates - and in the City of the Angels, those rebates are about to drop dramatically before they go away entirely.
LADWP’s Solar Incentive Program (SIP) has been divided into two pieces: Residential and Non-Residential, the latter of which was further divided between Commercial (applicable to taxable entities) and Non-Profit/Government (i.e., tax exempt organizations). The Non-Residential program is being phased out in favor of the Feed-in Tariff program (about which we have written extensively). The thing is - the price paid for energy under the Feed-in Tariff program is just too small to pencil out for entities that cannot avail themselves of the 30% federal Investment Tax Credit and depreciation - and unlike under the existing SIP which offers higher rebate rates for non-profits, the FiT only provides a single payment level regardless of the tax status of the entity.
Most non-profits are looking for modest-sized solar systems in the 30 to 150kW range. That is too small to attract lots of financing options and the boards of many non-profits are reluctant to commit to long-term leases for a depreciating asset.
Bottom line - without the help of a generous rebate, many - if not most non-profits - will be left on the sidelines of solar.
Which makes the news coming out of LADWP all the more troubling. We have learned this week that when DWP goes before its Board on June 18th, it will seek a final re-authorization of the Non-Residential SIP with a requested budget of $15 million and rebate rates of $0.70/Watt for Commercial and just $1.45/Watt for Non-Profits. As bad as that reduction is, when that $15 million is gone, that is it - no further funding of the SIP is planned.
How big is the shortfall caused by the lowered rebates? Assume two neighboring entities, one commercial the other non-profit, that want to install a 100 kW solar power system on their respective buildings. If we assume that the install cost comes in at $4.50/Watt, they are looking at an initial outlay of $450,000. The commercial entity will get a rebate of $70,000 and a federal ITC of $135,000 leaving an out-of-pocket amount of $245,000 - and that is before figuring in depreciation. The non-profit qualifies for a larger rebate, $145,000 under the proposed rates, but that’s it - leaving them with an out-of-pocket expense of $305,000 - $60,000 more than their for profit neighbor.
This is curious and troubling since the LADWP website has indicated - at the same time that we were being given this information - that when the SIP program resumed in July it would offer non-profit rebates of $2.25/Watt - a rate which would actually make our hypothetical non-profit come out ahead. A more modest rate of $2.05/Watt would allow non-profits, at least at this level of project size, to break even.
Rebates are intended to serve a number of purposes but one of those is to help make solar commonplace - to insure that systems are installed where they will be seen and understood to be reliable components of our future. Given that, where should limited rebate dollars be spent: assisting cash-strapped schools and churches to install solar where congregants and students can learn the lessons of sustainability - or simply to aid some company in lowering its operating costs and boosting its profits? (Don’t misunderstand - we are all for commercial rebates, but if it comes down to a choice, surely the non-profits are in greater need of the support.)
On June 18th DWP staff will present this proposal to their Board and perhaps these rates can be adjusted to give more help to non-profits. That would be a welcome outcome, but even more welcome would be an acknowledgement by DWP that as their program plans presently exist, there will soon be no way forward at all for non-profits to adopt solar.
Surely that cannot be the desired outcome.
Drive the freeways, ride the train from San Diego to Union Station, or fly into LAX and you cannot miss the obvious - Los Angeles has tremendous, untapped potential for solar growth. Now a new report from Michelle Kinman at the Environment California Research & Policy Center, seeks to layout the case for Solar in the Southland: The Benefits of Achieving 20 Percent Local Solar Power in Los Angeles by 2020. Here’s our take.
It is beyond dispute that there is a huge gap between the amount of solar that could be supported in the Southland versus the amount that is actually, presently installed. As Ms.Kinman’s report makes clear, even in the City of Los Angeles alone, that gap is enormous, as illustrated by this graph:
Citing a study by UCLA’s Luskin Center for Innovation, Kinman reports that the rooftops just in LA alone could support some 5,500 MW of solar power - of which a paltry 68 MW is installed today. That is a lot of potential. But Kinman’s report doesn’t focus on adding all of that - rather she has documented dramatic benefits that would follow from just reaching the goal of 1,200 MW by 2020.
In addition to supporting some 32,000 job-years of employment (thank you!), Kinman shows that installing that much solar would also have these benefits:
Kinman insists that this is an achievable goal, but one that would take “clear, strong and consistent direction and support” from the Mayor and the City Council to LADWP. Some specific policy prescriptions include:
If we have one criticism of the report it is that it fails to identify funding sources - other than anticipated savings - to spur this growth. For example, providing additional incentives for residential solar or expanding the FiT will come with a price tag. Who is going to put up that money? At a time when solar is under attack from investor-owned utilities for unduly shifting costs onto non-solar customers, the report misses an opportunity by failing to outline a mechanism to pay for its important goals.
Still, the report provides valuable documentation of the as yet unrealized benefits of tapping into LA’s solar potential; and in that it makes an important contribution to the ongoing policy debate.
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