CLOUDS OVER ‘MILLION SOLAR ROOFS’
by Herman K. Trabish, March 19, 2007 (Exclusive to NewEnergyNews)
Governor Arnold Schwartzenegger’s “Million Solar Roofs” legislation, signed with so much fanfare last fall, has become an impediment to the installation of solar energy systems, according to people who work in the field.
“It’s a disaster,” says Doug Korthoff, of EE Solar in Pomona, about the California Solar Initiative (now known as CSI, and known during its legislative gestation as Senate Bill 1 or SB1).
Korthoff described paperwork that jumped from 5 pages to 50 pages, excessive red tape and destructive redundant inspection requirements in the new legislation. But the worst problem may be ambiguities and reductions in rebate programs designed as incentives for homeowners to purchase solar energy systems.
“One of the effects of SB1 was to transfer responsibility for solar administration from the California Energy Commission to the local regulated utilities, such as SCE, PGE and Sempra, and to add new regulations to programs already in place at the municipal utilities such as LA DWP, Burbank, Anaheim, Pasadena…” Korthoff said in a email. “SCE, for example, is still working on a “DRAFT” set of guidelines, which puts all current rebate requests at risk since changes in the past have often been retroactive and punitive. It’s going on three months into the new program, and procedures are not yet solidified…”
Korthoff used the example of a $40,000 solar installation to illustrate the problem with the new rebate system. Prior to the institution of CSI, “…the customer only had to pay $30,000, the $10,000 rebate was sent directly to the installer, meaning that the homeowner only had to come up with the lesser amount. Often, this was critical, so that the solar customer only had to borrow the smaller amount…Both the installer and the customer knew, at the time of contract signing, what the rebate would be, what the cost of the system would be, and what the output was certified to be.
”Now, with CSI's Performance-Based system, the rebate amount depends on dividing the solar system up into planes, calculating the angle of each plane to the ecliptic, allowing for the orientation and for shading, and then using a conversion factor…Since each as-built system varies…and some of these angles cannot be calculated with certainty until the system is built, there is almost always, in practice, a difference between the original estimate…and the final estimation (which is verified by an on-site inspector and inclinometer)…the rebate amount may eventually vary, depending on who does the calculations…from $8,500 to $12,500. This changes the customer cost…and vitiates the credibility of the bid.
”The installer is in the awkward position of having to go back to the customer and tell them that the bill is off…sometimes in the thousands of dollars, or…eat the difference. The final rebate amount, under CSI, is often not known until the second of the final inspections.”
Noah Golden, of Golden Energy in West Los Angeles, has a different take on the legislation. He describes the new requirements as “very, very administratively burdensome” and “dizzyingly complex.” “Handling the paperwork end of the business has always been hard and it just got harder.” He estimates that the regulations will require 10 to 15 hours of paperwork per installation. “There’s no way it hasn’t increased the cost we pass on to the consumer,” he says.
But Golden stresses the good intentions of the legislation. “People in the solar world have so much integrity, they designed legislation with the noble goal of guaranteeing that every system be great.” He insists that the problems can be worked out. “I call it a solution in search of a problem,” he says. “The standards are to protect the public and the technology.”
He suggests it might be more effective to design an incentive program modeled on the one in Germany, where compensation is not provided for the purchase of the system but for energy produced. But Golden rejects the idea of any nefarious intent on the part of the utilities. “I have no doubt CSI was supposed to spur the growth of solar energy. But it is impossible to think the utilities don’t have a divided soul because they are in business to distribute electricity at a profit.”
Golden also distinguishes between the California Energy Commission’s “New Solar Homes Partnership” which he contends is working out well (at least in San Diego, where he is familiar with it) and CSI. He argues that the difference may be in administration. “Partnership” administration, Golden says, is mediated by a more neutral energy regulatory office.
One indication that Golden’s optimistic belief that difficulties can be worked out is right can be found in a letter on the California Solar Energy Industry Association (CALSEIA) website from the Public Utilities Commission (PUC) President Michael R. Peevey to California Assemblyman John J. Benoit acknowledging a discrepancy in electricity rates arising for CSI customers and pledging to resolve it.
Patrick Redgate, of AMECO Solar in Long Beach, and a CALSEIA board member, does not share Golden’s optimism. Though he has not often communicated with Korthoff, he has reached a similar conclusion. “I have renamed the CSI the California Solar Infarction…” he wrote in an email. “The program is a classic example of bureaucratism gone wild and features the combined objectives of an unholy alliance determined to keep solar in the domain of the utilities, rather than adopters…This program will not help our industry or consumers…”
Redgate, a 32-year veteran of the solar industry, recounted, in a telephone interview, the recent history of the solar industry in California. He cited three major battles between the utilities and the solar industry. Utilities won early restrictions limiting solar installers’ customer base (to 0.5% of the market); utilities unsuccessfully sought an “exit fee” paid by solar adopters to utilities for leaving the grid in 2003; and, just 6 weeks ago, utilities were denied the right to claim clean energy credits earned by solar adopters for trading in carbon markets. CSI was the culmination of this history and a political tug-of-war between Governor Schwartzenegger and the legislature, out of which came a complicated and inadequate bill, Redgate said.
Such efforts have left the utilities, as the optimistic Golden even pointed out, with nothing to gain from supporting solar energy. Redgate agrees. CSI is not necessarily, in his view, a nefarious plot by the utilities to discourage solar. It is the result of a long process of legislative compromises and struggles, which culminated in flawed legislation. As a result, according to internal industry figures cited by Redgate, California solar installations are sharply down in 2007. The contention between the PUC and the solar industry, which Peevey has pledged to resolve, does not leave Redgate optimistic. “It’s already legislated,” he says.
A California-wide CSI Program Forum is scheduled for April 2 at the PG & E Auditorium in San Francisco where, Redgate says, many of these complaints will be aired. Whether the problems can be rectified, however, remains to be seen.