Categories: "Solar Rebates"

05/07/11

  11:48:00 am, by Jim Jenal - Founder & CEO   , 340 words  
Categories: Solar Economics, LADWP Rebates, LADWP

LADWP Solar Rebate Program on Hold

Effective April 8, LADWP suspended its solar rebate program and will not accept any new rebate applications for at least 90 days. We have written before about the tumult at LADWP over its solar rebate program, noting that in many ways it was a victim of its own success.  Now they are confirming as much, pointing out that over the past twelve years the utility has dispensed more than $117 million in rebates and presently has over 2,000 rebate requests in process.  If all of those requests were to ripen into installed systems, they would exceed the utility’s rebate budget many times over.

Thus the decision to bring the program to a full stop while a change to the program is devised.  Which begs the question - how will the new program differ from its predecessor?  The most rational change would be to scrap the rebate program altogether and replace it with a feed-in tariff by which the utility pays the solar system owner for every kilowatt hour produced.  The benefit to LADWP is obvious and immediate - they do not have to make large, lump-sum payments to owners when the system is commissioned.  Instead, the utility pays only as the energy is actually generated which provides owners and installers with an incentive to insure that systems perform as advertised.

There are benefits to the system owner as well, including a higher overall compensation rate and a long-term guaranteed income stream.  After all, this is what they did in Germany and turned that sun-starved state into the largest solar market in the world.  Surely we could do the same - or better - here in sunny Southern California?

Unfortunately, the recent history of solar programs with the local muni utilities (with the notable exception of Pasadena Water and Power) has been very disappointing as rebates come and go at the whim of unelected bureaucrats.  It is hard to argue with LADWP’s need to get its program in order - hopefully they will take this opportunity to get it right.  You can phone them at: (213) 367-4122 or email them at: solar@ladwp.com.

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04/28/11

  11:29:00 am, by   , 435 words  
Categories: All About Solar Power, Solar Economics, PWP Rebates, PWP, Energy Efficiency

Run on Sun Featured in Pasadena Weekly Article - The City of the Future

The April 28, 2011 edition of the Pasadena Weekly has a very nice article by Sara Cardine titled, The City of the Future, which includes an interview with Run on Sun Founder & CEO, Jim Jenal.

Part of its month-long series of articles on going Green, Cardine’s piece looks specifically at how Pasadena has taken long strides toward turning itself into a truly Green City.  Starting with its adoption of a “Green Action Plan” in 2006 - the same year that Run on Sun was founded - Pasadena is working hard to turn its good intentions into practical actions.  For example, Pasadena has made major reductions in its own energy usage and is pushing to do much more.

From the article:

Since the Green Action Plan was established, the city has seen improvements on multiple levels, said Ursula Schmidt, the city’s sustainability affairs manager. In addition to increased water and energy conservation, renewable energy use and recycling, the city is also making headway in its green building program and in an effort to establish an alternative-fuel fleet.

Last year alone, Pasadena trimmed its peak power demand by 4.45 megawatts and saved enough energy to power 3,640 homes for one year. Officials now hope to see a citywide reduction in greenhouse gas emissions of 25 percent by 2030, along with an increase in the citywide use of green energy sources beyond recently adopted statewide standards. Last month, state lawmakers passed SBX1 2, a law requiring that 33 percent of the state’s energy come from renewable sources by 2020. Pasadena is already pushing itself past that benchmark; last year the City Council adopted a comprehensive integrated resources plan that set a goal of 40 percent renewable energy use by 2020, according to Gurcharan Bawa, PWP assistant general manager.

Encouraging commercial and residential customers to Go Solar is a big part of the strategy to meet those goals.  Caltech, one of the largest energy users in the City, has installed over 1.3 megawatts of solar power on its campus with more planned.  Yet some customers have been reluctant to follow Caltech’s lead.  To get the installer’s view, Cardine interviewed Jim Jenal and quoted him as he described the process of working with an installer to get a proposal and ultimately, an installed system.

Please check out the article online or pick up a print copy (which features a wonderful picture of Jim with that famous Solar Kid) and let us know what you think.

As Cardine concluded:

“This isn’t rocket science — it’s truly something normal, everyday people can understand and feel comfortable with,” Jenal said.
It just begins with a little knowledge and the commitment to make a difference.

We couldn’t agree more!

04/18/11

  08:33:00 am, by Jim Jenal - Founder & CEO   , 328 words  
Categories: All About Solar Power, Solar Economics, Solar Rebates, Solar Tax Incentives

Are Solar-Powered Homes More Valuable? Yes!

While the value of having a solar-powered home might seem self-evident - after all, energy prices are only going up so your solar power system will save you more and more money every year - there has been an open question as to just how much a solar power system would increase a home’s value at resale time. A new study published by the Lawrence Berkeley National Laboratory titled, An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California, is a significant step toward answering that question.

The report, funded by the U.S. Department of Energy, the National Renewable Energy Laboratory and the Clean Energy States Alliance, looked at the sale of some 72,000 homes in California of which approximately 2,000 had solar power systems installed at the time of sale.  The research found a substantial premium for solar-powered homes ranging from a low of $3.90/nameplate DC watt to as high as $6.40 with most model assumptions coalescing near $5.50/watt.  For existing homes, the premium was even higher - ranging from a low estimate of $6.00 to $7.70/watt.  (As all of our residential work involves existing homes, we found this conclusion particularly encouraging!)

Given that residential installation costs are currently running in the $6.00 - $7.50/watt range, this means that for the typical residential solar installation in the Run on Sun service area, the solar premium on home value more than exceeds the total cost of installing solar even before rebates and tax incentives are included.   There is no other home improvement that would provide such a 1-for-1 improvement in your home’s resale value while simultaneously resulting in thousands of dollars in savings over the years that you continue to own the home.

Whether it is to increase the value of your home at resale time, or to dramatically cut your energy costs, or to simply green your home and be more environmentally conscious, a residential solar power system continues to make more and more sense.  As in dollars and cents.

03/29/11

  10:30:00 am, by Jim Jenal - Founder & CEO   , 361 words  
Categories: Solar Economics, Solar Rebates, Utilities, Electric Cars that Run on Sun, Climate Change

Consumer Spending Up - To Pay for Energy!

The Los Angeles Times is reporting today that consumer spending rose 0.7% in February with most of that going to cover rising costs for food and energy. At the same time, the Times reported that gasoline prices in California now top $4.00/gallon for self-serve regular - an increase of more than 94¢ per gallon from one year ago.

While overall inflation remains low, inflation in the volatile energy sector is taking off. Oil prices remain above $100/barrel, while the price of natural gas is expected to climb substantially over the next year. Given that so much of the electricity used in Southern California comes from gas-fired power plants, it is clear that electricity prices will continue to climb, and likely higher and faster than they have in the past. Combine that with the need to address anthropogenic climate change, and the urgency of finding alternative energy sources that are not subject to extreme price fluctuations becomes ever more apparent.

But evil Dogbert’s imaginary press releases aside, it is not necessary to dream up some “new green energy technology breakthrough” to meet our needs.  Solar power is a tried and true technology that provides building owners with a substantial return on investment while reducing the building’s carbon footprint and providing a true hedge against runaway energy costs.

Today the California Assembly finally got over the hurdle imposed by some of its less visionary members and passed SB 2X which provides for a 33% Renewable Energy Portfolio Standard for the utilities in the state. Presided over today by solar champion Mike Gatto (D-Glendale), the debate on the Assembly floor was lively and, for the most part, enlightened. The bill now goes to Governor Brown who is expected to sign it.

There are many more policy steps that the legislature needs to advance - none more important than a statewide feed-in tariff to replace the existing patchwork quilt of “now you see ‘em, now you don’t” rebates - but today was a good start.  As solar becomes more commonplace, we will see the day when consumers don’t worry about their energy costs because they are locked-in for the next 25 years.

Now if we could only do something about food prices!

03/04/11

What You Need to Know About Commercial Solar Power in Three Easy Lessons - Part 2: Understanding Rebates and Tax Incentives

(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:

Utility PBI Rate EPBB Rate PBI/EPBB Threshold
SCE 3¢/kWh $0.25/W 50 kW
PWP 21.2¢/kWh $1.40/W 30 kW
BWP Suspended until August 2013 $2.07/W 30 kW
GWP Suspended until 2015 ??? ???
LADWP Suspended until July 2011 ??? ???
Commercial Solar Rebates as of March 2011

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

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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