Thoughts on Solar by Run on Sun's Founder & CEO, Jim Jenal

A bit off-topic, but given the wide-spread existence of downed power lines throughout the LA Basin, we thought it would make sense to include this timely advice from LADWP:

LADWP strongly encourages the public to stay away from any downed power lines and poles as well as downed trees and limbs, and protect children home from school today from the same. Beware of traffic signals that may be affected by power outage and proceed with extreme caution. Allow access for uniformed LADWP crews, all of whom carry Department-issued identification cards, so they may service infrastructure in need of repair.

In the event of a power outage:

•Stay calm.

•Have a flashlight and extra batteries nearby. Don’t use candles in a power outage.

•Turn off lights but leave one light turned on so you will know when your service is restored.

•Turn off and unplug appliances and other electrical equipment. Unplug heat-producing items like irons and space heaters. This helps prevent circuit overloading, which could delay restoration of service.

•Call us and report your outage at 1-800-DIAL DWP (1-800-342-5397). If you encounter a downed power line:

•Report any downed power lines immediately by calling the LADWP at 1-800-DIAL-DWP (1-800-342-5397). If you or someone else is in danger, call 911.

•Do not touch a downed or dangling wire or anyone or anything in contact with it. Always assume a downed line is still energized.

•If a power line falls on your car, stay in the car and wait for help. If you must get out, make sure you do not touch the metal parts of the car and the ground at the same time. The safest exit method is to open the door, stand on the door sill and jump free without touching the car.

•Stay away from metal fences, such as chain link fence, as there may be a power line down and touching the fence somewhere beyond your sight.

•If there is damage to the connection from the power pole to your house, you should go to the electrical box and turn off the main switch or shut off the fuse switch. Again, always assume electric lines are live.

•In case of an electrical emergency, stay calm and think before you act. Don’t become a victim while trying to help others. Call 911.

•If someone is shocked or not breathing, apply cardio-pulmonary resuscitation (CPR.) Then cover the victim with a blanket, keep their head low and get medical attention.

The public and members of the media are encouraged to check the Department’s news site at www.ladwpnews.com and Twitter page, @LADWP, for updates.

For folks not served by LADWP, you can report downed power lines by calling:

• Pasadena Water & Power (PWP): (626) 564-0199 or  (626) 564-0299
• Glendale Water & Power (GWP): 818-548-2011
• Southern California Edison (SCE): 911 and report an “electrical emergency” - see their safety tip sheet.

UPDATE - The GWP website is now displaying tables that layout the anticipated rebate rates for the next three years.  These tables, contrary to what we were told by GWP - but consistent with what we reported regarding the ordinance passed by the Glendale City Council - indicates clearly that systems larger than 30 kW (nameplate) are eligible for rebates and those rebates will be paid as a PBI rebate - not an EPBB rebate.

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(Editor’s Note: Part 1 of this series - Understanding Your Bill can be found here.)

Commercial solar power systems are economical now - and in the first part of our series we explained how understanding your bill is the key to understanding what is currently driving your costs and how much you will be able to save.

Now we turn to the next step in preparing to install a commercial solar power system - understanding the applicable rebates and tax incentives.  We have written at great length before about these topics, including a blog post summarizing the year-end state of all solar power rebates in the Run on Sun service area and our solar tax incentives page provides great detail into this topic for all types of system owners - commercial, residential and non-profit.  In this post we will analyze just those rebates and incentives that are applicable to commercial solar power installations.

PBI vs EPBB Rebates for Commercial Solar Power Systems

Rebates for commercial solar power systems come in two flavors - Performance Based Incentives (PBI) and Expected Performance-Based Buydown (EPBB) - but PBI rebates are by far the more common for commercial systems above 30 kW.  EPBB rebates are lump-sum payments made based on the expected performance of the system.  The rebate rate is denoted in dollars per Watt based on the calculated AC Watts for the system.  EPBB rebates are nice for the consumer as the money is paid as soon as the system is approved, but for larger systems, they represent too much upfront risk for the utility.  Since there is usually no requirement to monitor the performance of the system, the utility ends up putting out its money with little guarantee of reaping the expected benefit.

PBI rebates, on the other hand, are paid out over five years based on the actual performance of the solar power system as verified by monitoring devices attached to the system inverter(s).  PBI rebates are denoted in cents per kilowatt hour generated.  Since the utility only pays for power actually provided, rebate dollars are guaranteed of providing the bargained for benefit. However, because of the need to provide the utility with verified performance data, PBI rebates increase the Operations & Maintenance expense of a commercial solar power system - at least for the five years of the rebate.  On the other hand, if your system is well maintained and conservatively designed, you may actually receive more in rebate payments than originally projected.

Each utility will have a threshold system size beyond which the system owner must take a PBI rebate.

Regional Rebate Amounts for Commercial Solar Power Systems

Of late there has been a great deal of turmoil among the local municipal utilities regarding their rebates.  This has lead to uncertainty and delays.  As of this writing, here is the landscape for commercial solar rebates in the Run on Sun service area:

This means that as of this writing, only SCE and PWP are paying rebates on commercial solar power systems greater than 30 kW. While LADWP is expected to come back online this summer, in what form remains to be seen.

We believe that these suspensions have come about because the lobby for commercial solar rebates is small and too often silent.  Of course, when no public discussion occurs before the decision is made to suspend rebates - as happened in both Glendale and Burbank - it is pretty hard to organize solar supporters.  Indeed, in Los Angeles, where the plans to severely limit solar rebates were publicly debated, the solar community came out in numbers to argue for those rebates - which resulted in LADWP only suspending their program for a comparatively short time.

The conclusion in inescapable - until there is a statewide feed-in tariff at a reasonable rate that offers predictability along with economic viability, the market for commercial solar in this state will continue to be subject to the caprice of unaccountable bureaucrats.

Tax Incentives for Commercial Solar Power Systems

While the news regarding rebates remains murky, the news on the tax front is - at least for this year - very good.

One caveat before we begin - while we believe this information to be accurate as of the date that it is written, you must always consult with your tax professional as to the applicability of these incentives to your tax situation.  Accountants shouldn’t design solar power systems and we don’t give tax advice.

Commercial solar power systems qualify for a federal Investment Tax Credit of a full 30% on the direct cost of the system.  (By “direct cost” we mean those costs directly associated with installing the solar power system.  The applicability of the Credit to indirect costs - such as deciding to re-roof your building before adding solar - must be decided on a case-by-case basis - see why that tax pro gets paid the big bucks?)  That Credit can be taken over two years and is a substantial incentive if you have the tax liability to offset.  Fortunately for systems that are put in service in 2011, commercial solar power system owners can elect to receive a Grant directly from the Treasury for the full 30%, regardless of their tax appetite.  Moreover, that Grant is paid out typically within 60 days of project completion, as opposed to being credited in the next tax payment cycle.  This provision in the tax code is subject to expiration at the end of this year, and there is no telling whether a more conservative Congress will renew it.  (The tax Credit, however, continues through 2016.)

Commercial solar power systems also qualify for accelerated depreciation.  For the past several years, that was a five year period with 50% in Year 1 and the remaining 50% divided evenly over the next four years.  (California offers a similar depreciation schedule.)  However, once again 2011 is special.  This year alone, that depreciation is 100% in Year 1, meaning that system owners may realize more of their savings sooner.

Collectively, rebates and tax incentives can reduce the cost of a commercial solar power system by 50% or more.  When combined with the savings from the energy generated, it is easy to see why a commercial solar power system is one of the best investments a building or business owner can make.

Up Next - Part 3 of Our Series: Understanding Your Bid for a Commercial Solar Power System

Back in September we wrote about the sorry state of affairs at Glendale Water & Power where solar rebates were being suspended until this coming July. We just received some additional information from the folks at GWP and we wanted to share that with you. In response to our inquiry about the status of the rebate program, we received the following response:

If the system size is greater than 30kw, we will not be accepting commercial applications for the next five years. If the system size is less then 30kw, customer’s application will be placed on our waiting list. Please be aware that our 2011 waiting list is full. We’re now accepting applications for our 2012 waiting list.

Yikes!

So a solar program that had previously provided some of the best rebates around, is now out of the commercial rebate business for the foreseeable future and no new system application below 30 kW, residential or commercial, will receive rebate funding for another 18 months!

Not exactly a recipe for solar jobs growth in Glendale!

(Editor’s Note: This is Part 2 of our end-of-the-year Solar Economics series. 
You can read Part 1 - Solar Tax Policies - here.)

One of the most important factors in the growth of the local solar industry has been the availability of utility-based rebates for solar power installations.  This year has seen a lot of developments in this area, and unlike the tax arena where the news is all good, the simple, sad truth is that rebates are declining throughout Southern California, with some utilities suspending their rebates altogether and others threatening to do so.  Will the defeat of Prop 23, assuring that AB 32 will go into effect after all, mean that there will be additional funds injected into solar rebates?  Will a feed-in-tarrif finally take hold in California?  And where are rebates now, anyhow?  We will try to answer some of those questions in this post.

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