Many local solar energy industry advocates rejoiced Monday afternoon when CPS Energy announced the reallocation of $30 million to continue funding its solar rebate program previously set to expire on Jan. 31, 2016. Industry and utility officials estimate the infusion will last about three years, depending on how the market, as well as CPS Energy residential and commercial customers, reacts to the new rebate amount.
CPS Energy currently issues a single, flat rebate amount of $1.60 per watt. Starting Feb. 1, 2016, the public utility will use the first $10 million worth of solar rebates at $1.20 per watt, the next $10 million at $1 per watt, and the last $10 million at $0.80 per watt.
By stepping down the rebate, the public utility can ease the solar industry off of city subsidies, supporting it long enough to become sustainable without rebates, said CPS Energy Executive Vice President of Generation and Strategy Cris Eugster.
“For the same amount of solar, CPS Energy is paying for less of it,” Eugster said. And the technology is cheaper. He estimated that the extension will help bring on about 30 megawatts (MW) of solar power to add to the approximately 25 MW of solar installed through the program since 2008.
“Ultimately, we want the (private solar installation) industry to be viable without a rebate,” Eugster said, which has been the goal all along in local, state, and federal rebate programs. The “solar hosting” and “roofless solar” pilot programs will also continue to support the local solar economy by providing options outside of private ownership, he said, that carries the barrier of high upfront costs. An average installation costs about $9,000 after rebates and tax credits.
Ben Rodriguez, a solar consultant and spokesperson for the San Antonio Solar Alliance, said these final three years of rebates will carry the local industry into an era of sustainable, rebate-free private solar installations.
Seveal solar installation company representatives involved in the Solar Alliance led the local charge for the utility to expand the rebate program, Rodriguez said, and will join dozens of other organizations to continue that advocacy on the national level as the federal renewable energy tax credit program is set to expire at the end of 2016.
While it’s possible that the solar industry can still achieve sustainability without rebates or tax credits, he said, keeping the federal tax incentive is the “next fight for the Solar Alliance.”
This will be the last time the Solar Alliance comes to the City or CPS Energy for more rebate money, Rodriguez said, as the Alliance agrees that in about three years the cost of solar technology and equipment will decrease to a level that keeps the total return on investment period for customers that purchase their own solar system under 10 years – without installation subsidies.
“Participation drops significantly” once you tell someone it will take more than 10 years to pay off their solar panel installation, he said.
The money was previously earmarked for other programs in the Save for Tomorrow Energy Plan, which featured the solar rebates as one of 22 programs aimed at reducing citywide electricity demand by 771 MW by 2020. CPS Energy originally allocated $40 million for its solar rebate program in 2008. It has since allocated an additional $20 million. This most recent round of funding will bring the total spent on solar rebates by CPS Energy to $90 million. Almost 3,300 CPS Energy customers have participated in the program, according to officials.
*Top image: Solar panels on an Eastside home in San Antonio. Photo by Scott Ball.