Rebate Rule Chills Sales of Solar
Rebate rule chills sales of solar
Installers fear collapse as many homeowners choose to avoid associated higher utility costs.
By Marc Lifsher, Times Staff Writer
May 8, 2007
SACRAMENTO — California homeowners are rejecting new rebates for solar power equipment, saying the state has made installing the rooftop panels far more costly than expected.
As a result, Public Utilities Commission reports show a decline of 78% in rebate requests in the first three months of this year, compared with last year, and the solar installation industry says it is threatened with collapse across much of California.
At issue is a requirement the state added Jan. 1 for getting a rebate under Gov. Arnold Schwarzenegger's Million Solar Roofs program. Applicants must first sign up for costly pricing plans offered by utilities that charge more for their electricity during hours of peak demand.
Alfred Cellier had plans to install a $17,000 solar system at his Rancho Palos Verdes home until he penciled out the cost of the new state requirements and decided against it.
The retired electronics engineer said he was all for solar power "because it's green and the right thing to do, but I don't want to be treated unfairly."
Sue Kateley, executive director of the California Solar Energy Industries Assn., said the rebate changes backfired. "It's a mess," she said. "It was everyone's intent to expand the use of solar in California, not throw it into the ditch."
Many homeowners quickly decided that it might not be worth going solar under the new requirements. The costs would be burdensome for those who couldn't afford or lacked the roof space to buy systems that would supply all of their electricity needs.
The unintended glitch was created in December, when the PUC moved to implement the law by requiring that solar users switch to the higher "time of use" rates for their supplemental electricity.
Industry experts say that with the higher rates, solar power offers less savings on electricity bills and may not justify the investment of more than $10,000 in solar panels — even with a rebate of as much as 50% of the cost and a federal tax credit.
What's worse, some people in the Inland Empire and the desert might see their bills rise after putting solar panels on their roofs, the experts add.
"The solar industry in the desert in the Southern California Edison territory is dead until this thing is fixed," said Pat Conlon, an energy-efficiency expert with the city of Palm Desert. "As of Jan. 1, there have been no new installs."
He said a YMCA in Palm Desert decided against a solar system after managers concluded that future savings on electricity would not cover the cost of installing the rooftop panels.
Under the new program, homeowners filed rebate applications for systems generating 1,415 kilowatts of solar power statewide in the first three months of this year. A year earlier under the previous program, the state approved applications totaling 6,417 kilowatts.
Embarrassed state officials are scrambling to fix the problem.
"The fact that some customers may find themselves paying higher electricity bills if they decide to install solar … is unfortunate and indeed perverse," California PUC President Michael R. Peevey said in a recent letter to legislators.
"It's sort of a screw-up," said solar advocate V. John White, executive director of the Center for Energy Efficiency and Renewable Technology in Sacramento.
On the hot seat is Schwarzenegger, who in August signed legislation that sought to provide $3 billion in rebates over 10 years to boost the use of nonpolluting solar power.
Only last month, he bragged about his California Solar Initiative in an Earth Day radio address — with no mention of its lack of early success.
Bill Maile, a spokesman for the governor, conceded that the solar program was flawed. The administration is considering asking the Legislature to quickly pass a law that would make solar power more affordable, he said.
The governor also asked the PUC to work with the state's three investor-owned utilities to come up with "a properly designed rate structure" that doesn't penalize solar owners, Maile said.
