New Solar Industry Group Opposes CPS Energy Project

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SRS Employee Drew surveys a recent solar energy installation at Green Acres Golf in San Antonio. Photo courtesy of Self Reliant Solar (SRS).

SRS Employee Drew surveys a recent solar energy installation at Green Acres Golf in San Antonio. Photo courtesy of Self Reliant Solar (SRS).

As CPS Energy prepares to roll out a new pilot program aimed at covering as many customer rooftops with solar panels as possible, local solar industry professionals have formed the San Antonio Solar Alliance (SASA), a nonprofit interest group that aims to stall the program’s contract negotiations.

It might seem counterintuitive for local solar installers to seek a delay in the new program, but SASA representatives said it could cost the industry hundreds of jobs by effectively replacing existing subsidies now available to residential homeowners. CPS Energy representatives said that the new community solar and rooftop leasing programs will expand solar’s reach to lower-income customers while providing plenty of opportunities for local installers.

The existing subsidy program, as structured, has been most widely used by homeowners with the resources to undertake home solar projects and has not widely benefitted lower-income customers.

CPS Energy confirmed Monday that Clean Energy Collective (CEC), a Colorado-based solar developer, was awarded the contract for its separate community solar pilot program. The news was first reported by the San Antonio Business Journal Monday evening.

CEC will build a utility-scale solar farm and sell each panel at a set price to CPS Energy customers who will receive discounts on electricity bills according to how much energy their panels produce. More information will be released about the size and cost of the program next week. The original request for proposals called for one megawatt (MW).

Contract details for the rooftop leasing program are now being negotiated with a second, undisclosed company selected by CPS Energy from vendors that responded to the public utility’s RFP in February 2014 for an additional MW of distributed solar. This contract calls for a company to lease residential rooftops from customers for solar panel installations, with the intention that local companies will do the actual installation work.

The energy produced by the solar arrays on leased rooftops would be sold back to the energy utility. Participating customers would receive payment or a monthly credit for use of their rooftop, assuming completion of the current contract negotiations. It’s possible that customers will have to pay a small, one-time fee – but again, details are still pending.

CPS Energy Vice President of Corporate Development and Planning Raiford Smith

CPS Energy Vice President of Corporate Development and Planning Raiford Smith

The negotiations are “very positive, but very delicate,” said CPS Energy Vice President of Corporate Development and Planning Raiford Smith.

Both community solar and rooftop leasing are “the next generation of solar offerings in San Antonio,” that will allow lower-income consumers to participate in the solar energy economy by removing the upfront costs of owning their own system, Smith said. “What we really want is (a solar program) that reaches a broader audience.”

The typical 5-kilowatt (kW) system costs about $9,000 to install – after local and federal rebates which expire in 2015 and 2016, respectively. Without those rebates, that same setup would cost on average $21,000. That bumps the time it takes to pay off that system up from seven years to more than 14 years. The average life of a system is 25 years.

Smith said a majority of the subsidized residential solar panel installations have been done in higher-income neighborhoods.

“We think this (rooftop leasing) program eliminates financial barriers that essentially limits it to wealthy individuals,” he said. “I understand (SASA’s) concern … but we’re charged with finding the most cost-effective way to provide demand response reduction for all CPS Energy customers.”

Geographically, solar installations are more common in higher-income neighborhoods, according to CPS Energy.

Geographically, solar installations are more common in higher-income neighborhoods, according to CPS Energy.

What some people involved in the local industry fear, said solar consultant and SASA spokesperson Ben Rodriguez, is that once the one megawatt (MW) contract is awarded, there will be a monopoly on installation contracts throughout the city as more customers opt for the less expensive rental option rather than pay the steeper upfront costs necessary if homeowners want to own their own system. That will reduce the number of total private installations and likely result in the loss of jobs, Rodriguez said, adding that “the installation community feels like they weren’t properly consulted with before those programs (were announced).”

The differences between CPS Energy and the newly formed SASA group reflect the uncertainty of a still nascent and developing industry where private sector contractors remain largely dependent on CPS Energy and its evolving public policies and strategies. The consumers who want more renewable energy options, of course, want the greatest possible access at the lowest possible cost, and public interest groups want to see the maximum number of ratepayers positively affected, regardless of their income limitations.

Seventeen local solar companies are listed as members of SASA on its website so far. There are about 44 certified solar contractors on CPS Energy’s list. Rodriguez estimated that about 85% of rooftop solar in San Antonio has been installed by members of SASA.

SASA also is calling for CPS Energy to expand its solar rebate program, which will run out of funding at the end of 2015, through 2020.

Ben Rodriguez

San Antonio Solar Alliance spokesperson Ben Rodriguez

“That really could do significant damage to the private industry,” Rodriguez said, which employes about 500 people whose jobs could be at risk. SASA members want to work with CPS Energy to “extend the solar rebate … come up with a more suitable resolution to the rooftop leasing RFP and then also want to give some opinions as to how the community solar project is run and managed.”

CPS Energy’s solar rebates are funded by the $849 million Save for Tomorrow Energy Plan (STEP), which started in 2009 after City Council passed an ordinance approving the underlying funding, policies and clean energy goals. STEP is an initiative to reduce the city’s demand for electricity by 771 megawatts by 2020 – in essence, eliminating the equivalent of an entire coal-fired power plant.

“Funding set aside for those (solar rebate) programs essentially has run out – we’re using the last of those funds through the remainder of this year,” Smith said of the current subsidy program favored by SASA.

But STEP is more than solar rebates – there also are programs that allow for more accessible efficiency retrofits of household appliances and features, including smart thermostats, refrigerator recycling, LED light discounts, home weatherization, and more. Extending the solar rebate program would mean reallocating funds from these programs that also reduce demand on the energy grid. While CPS Energy has the New Energy Economy goal of using renewable energy to power 20% of San Antonio by 2020, STEP has a more general goal of demand reduction.

CPS Energy's Justin Fisher explains how the free Home Manager program works to a curious customer. Photo by Iris Dimmick.

CPS Energy’s Justin Fisher explains how the free Home Manager program works to a curious customer during an informational session. Photo by Iris Dimmick.

“Since inception, in CPS Energy FY (fiscal year) 2009, CPS Energy has quantified a cumulative demand reduction of approximately 345 MW” through FY 2014, according to the most recent Quarterly STEP Report to the City of San Antonio.

“The reason why the rebate money is used up is because of how successful the program has been,” Rodriguez said. “It was supposed to last until 2020, that was the goal. But the installation industry did such a good job of delivering these programs (that CPS Energy ran out of funding for it).” Businesses started here and moved here on the basis of thinking that rebate would be around until 2020, he added, success shouldn’t be punished, but rewarded.

Businesses like Laredo-based South Texas Solar Systems owned by James Hiebert, who opened an office in San Antonio to participate in the rebate program, which has 10 employees.

“Overall, STEP hasn’t reached its goals yet,” Hiebert, a SASA member said. “CPS Energy has done a really good job in applying (the program) and we’ve been really happy with them up to this point, we just really want to get the rebate going through 2020.”

Texas Solar Utilities owner Warren Wardrup

Texas Solar Utilities owner Warren Wardrup

The goal for the solar industry is to subsidize installations until the price of the technology comes down, said Warren Wardrup, who owns the local solar installation company Texas Solar Utilities, is on the board of solar advocacy organization Solar San Antonio (SSA), and is serving on the first, temporary board of SASA. The year 2020 is seen by SASA as the year for that to happen.

“This is not a leasing program that’s similar to other leasing programs around the country,” Wardrup said of CPS Energy’s rooftop leasing RFP.

Other leasing structures, including those used by California-based SolarCity, involve a purchasing power agreement between the customer and the third party instead of the third party and the utility. “They act as an alternative electricity provider,” Wardrup said. “We (SASA) are not interested in Third Party ownership models at the moment,  specifically were one company holds a monopoly excluding all others in participating, which the current community solar and rooftop program models allow.”

Solar City, for instance, leases equipment to the customer who agrees to buy the solar power generated at a reduced rate. This means, however, that customers are giving their money to a third party and not to the city-owned utility, which gives up to 14% of revenue to the City of San Antonio every year – totaling more than $300 million, a third of the City’s $1 billion-plus General Fund.

Long-term, Rodriguez said SASA wants to provide “a platform for the industry to speak from … to make sure that the installers and the industry – whether it be the installers, the manufacturers, financiers, third party investors – have a voice in the direction of public policy that’s being instituted.”

While Solar San Antonio’s mission is to support the proliferation of solar and renewable energy across the city and the state – regardless of what structure it follows, SASA has a more industry-driven mission to ensure a fair marketplace for its members.

“At Solar San Antonio, my father, William Sinkin, and I dedicated ourselves to helping create a local solar industry. He would be very happy about the creation of a San Antonio Solar Alliance. The solar panel marketplace is extraordinarily competitive and everybody is doing everything to squeeze the price down while ensuring the highest quality systems,” stated former SSA Executive Director Lanny Sinkin who stepped down about eight months ago.

SSA has since merged with Build San Antonio Green, a nonprofit residential sustainable building program, and shares Anita Ledbetter as executive director.

As for the installers not on SASA’s member list, Smith said that many are supportive of the rooftop leasing program and look forward to pitching competitive bids for the installation contract with the mystery company – if that is in fact what the contract allows.

It’s unknown how much longer the contract negotiations will last, but the project is already behind schedule; the RFP issued in February called for installations to begin by May 1 of this year.

 

Full disclosure: The Arsenal Group LLC, which publishes the Rivard Report, provided consulting services to CPS Energy in 2012. Monika Maeckle, who co-founded the Rivard Report, worked for CPS Energy as director of integrated communications and has now returned to consulting.

*Featured/top image: SRS Employee Drew surveys a recent solar energy installation at Green Acres Golf in San Antonio. Photo courtesy of Self Reliant Solar (SRS).

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Coming Soon: Accessible, Affordable Community Solar

OCI Solar Power Starts Construction of Texas’ Largest Solar Plant

Woolly ‘Lambscapers’ Back At Alamo II Solar Farm 

Sinkin To Leave Solar San Antonio

Home-Grown Solar Farm Producing Power in The Alamo City

11 thoughts on “New Solar Industry Group Opposes CPS Energy Project

  1. Wait…the community provided $40,000,000 (solar funding in STEP) for the solar rebate program and the majority of money went to households with high income levels. When CPS comes up with two new programs to provide solar to underserved areas (look at the map) this alliance is opposing them! Not only are they opposing the two new programs but they want more $$$$. San Antonio needs programs that are available to the ENTIRE community – not just the few. It sounds like these two new programs do just that. Sign me up.

  2. I have a long track record of supporting CPS Energy, in not allowing companies like Solar City to enter this market.

    Solar leasing programs are complicated for consumers, specifically predatory for low income participants and provide little value, when compared with the low interest loans that most solar installation companies provide in San Antonio today.

    The TRUTH is the Community Solar and Rooftop leasing programs ARE subsidized HEAVILY by the citizens of San Antonio through a higher PPA contract with CPS Energy and the Contractors who win the bids.

    The (SASA) wants to look closely at those subsidies to provide transparency in the information being provided by CPS Energy about each solar program. We support an open and fair marketplace, with maximum benefits to ALL citizens in San Antonio.

    • To clear up confusion for other readers: There are TWO leasing concepts now and its easy to confuse them. (Really one should be relabelled for clarity.)

      A. You can lease equipment from a company like Solar City. I agree that a leasing program of this nature could be pretty complex and should be carefully compared against financing a purchase of your own system. I wonder, though, if long-term ownership really makes the most sense with solar panel prices crashing and the technology improving. Maybe it still does, but those are factors to consider.

      B. The second, newer concept should be called something like “rooftop rights” instead of “rooftop leasing” because as a consumer, you are not leasing anything. This will be a program where you grant permission for CPS to use your rooftop to host their own solar panels that they install and maintain and connect in front (not behind) your meter. As I said in my other comment, this is more like oil and gas rights, and the “royalties” you receive from hosting the solar panels are expressed as discounts on your CPS bill.

      • Todd Morey….. It’s absolutely “AMAZING” that you have such intimate knowledge and details on this new rooftop RFP solar program, and can break it down and talk about it so eloquently, before CPS Energy has even released the details to the public. Interesting…

        You sir, have a special gift, or it’s more likely your just pushing the message for the private company that has the most to gain, if this solar rooftop fleecing project, oops.! I meant to say the solar rooftop leasing project potentially moves forward.

        or should we call it the…. leasing, but not really, non-leasing type project / or the real similar to oil & gas. type project / or the roof royalties type project / or the rooftop rights type project.

        GEESH… Thank you for clearing up any confusion.

        • Bill, I’m genuinely curious about options and I can see pros and cons to all of them. I’m not even in the industry—everything I’ve learned is from reading articles (thanks, Iris) and asking questions. Why? Because I’d like to put solar on my house but I’m still pretty confused about the right way to do it. I’ve been researching since I bought the place five years ago. You have to admit its fairly confusing. My current thought: continuing to wait another year or two to see how it all settles, even if that means some of the incentives expire.

          I just would love to see San Antonio take a leadership position on energy.

  3. So, this reminds me of the Taxi company vs Uber debate. And, refreshingly, CPS is the Uber in this case. CPS wants more choices for us, but the old model (taxi) is not going away, either.

    Plus, if I am reading this correctly, all the installations will be done by the very same solar companies (including SASA members) here in town.

    So, by giving the citizens of San Antonio more choices, including zero cost ‘rent your roof’ options, the pie gets bigger for SASA members and we get more solar in San Antonio, more quickly and in more neighborhoods.

    Sounds to me like everyone wins (including the SASA members).

    • Good one Robert…tie this issue to the Uber debate. How laughable.

      Didn’t you just get into the renewable business?

      What company is it exactly that you represent or work for again? It couldn’t possibly be one of the companies that stands to gain from this new program launch, could it?

      This issue is more in line, with a little story about David and Goliath. I think we can all assume what role CPS Energy plays.

      We shall see what happens!

  4. Ok, it’s a admittedly a bit confusing, but I’ve tried to break it down. After reading over this a few times, the net impact of these programs is a wide range of options for solar power. I can’t help but see that as a win. Read below and see if you agree:

    1. You can install your own solar system on your own home, reducing the power your home pulls from the grid. There have been subsidies and federal incentives, but this option still requires the homeowner to pay or finance at least around $8,000 for the system. It seems you would enjoy the most cost savings in energy consumption, but there’s an open question as to how much you’ll really save over the useful life of the system once you factor in the costs (equipment, installation, and maintenance).

    2. But what if you are renting? In an apartment? In a home that isn’t ideal for solar? You can purchase a remote solar panel that lives offsite as part of the community solar pilot program. Essentially, it’s building a solar farm on almost a Kickstarter model. By investing in a panel that lives out in a field, you are paid for the power it produces in offsets to your utility bill. A pretty creative solution.

    3. The newest option will be the “rooftop leasing program”. This flips the model, with CPS owning, operating, and maintaining all the equipment (through contractors of course, but that’s the effect). So if you have a house that will work for solar and want to participate without any thought, effort, or expense, this is the simple option. Think of it almost like a green version of oil and gas rights. Grant CPS access to use your roof, they install panels and connect them in front of your meter to feed the grid. (In effect, building a distributed solar farm on rooftops.) For your participation in the program, you are given credits on your power bill.

    I understand the concerns of companies competing for contracts, but as you can tell, more options will just grow the entire industry. I think the fear is unfounded and I don’t think we should protect jobs (even local ones) by eliminating options. Actually, with so many ways to participate, I’m going to start looking into solar for my own family. And ultimately, that’s goal of all of this. Anyone who wants to see San Antonio doing our part to help move to renewable energy sources should be pretty excited.

  5. Not a good sign , I think, when public solar ‘pilot’ projects launch in 2015 without:

    – new renewable energy use and production targets or timelines:

    (still aiming for 20% renewable energy by 2020, a long-running aim – at 16% currently? – while Austin has been at 24% since 2014, is close to 35% today and aims for 50% +renewable energy in the near future)

    -commitments to municipal use and production of renewable energy:

    (meanwhile, the City of Austin has been committed to 100% renewable energy in its municipal operations since 2011, growing the renewable energy sector there. The City of San Antonio could make a similar commitment to 100% renewable energy in its municipal operations – through n expanded ‘windtricity’ & ‘solartricity’ subscription service as well as via more solar production on public buildings and structures as a key part of new pilot work)

    – clear financial incentives for customers:

    (meanwhile in Austin, customers are rewarded for less energy use with lower rates and are guaranteed that rates won’t increase more than 2% a year. In addition, residential solar producers pay no monthly grid connection fee – an understood utility maneuver to slow solar growth – and are paid10.7 cents per every kilowatt-hour added to the grid through a Value of Solar credit that acknowledges the benefits of of customer produced solar including lower emissions, lower peak demand and growth of the clean energy job sector)

    – innovations in on-site battery storage and grid connection:

    (solar as well as grid-tied home batteries or ‘powerwalls’- which could have been built by Tesla in San Antonio – are a key aspect of the SolarCity / Tesla partnership not mentioned above. Home batteries help to curb peak demand and serve as backup energy when utility services are out)

    – adjustments to local planning policy:

    (new efforts should make it easier to install grid- and battery-tied solar panels on residential and commercial properties in San Antonio, including via requirements with new development and meters. Noting the shortfall of distributed solar within the 410 area, San Antonio should not only increase production on municipal buildings and structures, the city should make it easier to install – non-damaging and reversible – solar panels in historic districts).

    The City of San Antonio should move quickly to follow Austin in committing to 100% renewable energy with municipal operations to support and grow the current renewable energy customer subscription option (‘windtricity’) and local renewable energy production.

    The City should also raise the 2020 target to 35% renewable energy, including to encourage the success of the latest ‘pilot’ solar projects (replacing the 2009 ’20-year’ solartricity pilot).

    In addition, the City should modify existing development code to make solar panel installation and home batteries / powerwalls easier (including in historic districts within the 410 loop) and grid connection a requirement with new development and meters.

    The City should also move to curb efforts to introduce monthly grid connection fees (an understood utility maneuver to slow solar growth). Instead, the City should introduce a Value of Solar credit above 10 cents a kilowatt hour (currently less than 2 cents for ‘net electricity generation’?) that rewards more customers more adequately for solar production.

    Such efforts by the City will help to share the benefits of renewable energy use and production – including solar – with more CPS energy customers.

    Resources:

    Power to the People: why the rise of green energy makes utility companies nervous (2015)
    http://www.newyorker.com/magazine/2015/06/29/power-to-the-people

    City of Austin goes 100% renewable (2011):
    http://www.environmentalleader.com/2011/10/03/city-of-austin-texas-goes-100-renewable/

    Austin Energy -real-time renewable energy monitoring:
    http://austinenergy.com/wps/portal/ae/about/environment/renewable-power-generation

    CPS Energy – nuclear power (35%), coal (34%), natural gas (15%), renewable energy (16%).
    https://en.wikipedia.org/wiki/CPS_Energy

    SolarCity: backup energy supply
    http://www.solarcity.com/residential/backup-power-supply

    CPS Energy: ‘windtricity’ – subscribe to 100% renewable energy today
    https://www.cpsenergy.com/en/about-us/programs-services/energy-generation/wind/windtricity.html

  6. “The typical 5-kilowatt (kW) system costs about $9,000 to install – after local and federal rebates which expire in 2015 and 2016, respectively. Without those rebates, that same setup would cost on average $21,000. ” I realize this article is a year old, but this figure is wrong. We have a 10.1 kw array on our roof, and after the CPS Energy and federal rebate, we only paid about $11,000–that, and we went with the more expensive microinverters that convert DC to AC at the panel. Something about the CPS new program sounds fishy. Why would they only want to contract with an proprietary solar panel manufacturer when there are so many different solar panel makers out there already? You can even by solar panels at Lowes and Home Depot. They’re not all made in China. Why CPS Energy continues to make things harder than they have to be, instead of just contracting with an already existing solar panel manufacturer and buying in bulk like all the other contractors do makes me think they don’t really know what they’re doing–or it’s all lip service. Are these guys that dumb?

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