CPS Energy Switches Up Solar Rebates to Offer Bigger Incentives for Small Systems

CPS Energy has adjusted its solar energy rebate program to favor small solar arrays over larger ones, a change that some solar installers say will hurt their business.

For the first time since its solar rebate program began in 2007, CPS Energy switched to a flat rate for all residential solar systems instead of a per-watt rate based on the size of the project.

The municipally owned electric and gas utility instituted the changes as part of its commitment of another $15 million in rebates to motivate more of its customers to adopt solar. As of mid-November CPS Energy has spent a total of $129 million on solar rebates to 13,680 customers since the program began.

The new rebate took effect over the weekend, shifting CPS Energy’s incentives from $0.60 per watt to a flat rate of $2,500 per project for residential systems for the first $9 million in residential rebates. After that $9 million runs out, CPS Energy will pay $1,500 per system for the next $5 million.

Austin Energy also offers a flat rebate of $2,500.

For commercial systems, the utility allocated the remaining $1 million to be paid out at the previous $0.60-per-watt rate. After that, the rebate will switch to the same rules as the residential incentives – $2,500 per project, then $1,500 per project.

The utility predicts the new rebate will fund 6,200 projects, more than double the number funded by the previous $15 million that lasted roughly from February through the end of November.

The change in the rebate structure upset some local solar installers. Several said it caught them off-guard when utility officials announced it last month and that it would cause some companies to leave San Antonio. CPS Energy’s most recent survey of local installers states that the industry employs 976 people

“We’re going to have a critical drop in the adoption and embracement of the solar initiative citywide,” said Ben Rodriguez, director of sales for South Texas Solar Systems.

CPS Energy also made changes to a bonus rebate to encourage customers to use local panels from manufacturer Mission Solar. The new structure switched those incentives from $0.10 per watt to $500 per project.

Rick Luna, CPS Energy’s interim director of technology and product innovation, said in a phone interview Wednesday that the new incentive structure will simplify the program for customers, stretch the $15 million further, and motivate more customers in lower-income parts of town to adopt solar.

A map Luna showed at November’s CPS Energy board meeting shows that most solar customers who have accepted rebates have homes and businesses on the city’s more affluent North Side, with much fewer rebates granted on the Southside.

“There are some roofs that may not be facing the right direction, there may be shading,” Luna said. “That aside, the other barrier is upfront cost. So if you have a smaller system, in this case a more attractive rebate for those customers, then that addresses that barrier.”

Saul “JR” Peralez, director of sales for Solar Electric Texas, said he thought CPS Energy’s new approach would encourage more adoption of solar in lower-income neighborhoods. He said his company would be able to adapt to the new rebate.

“It’s a little bit of a re-shifting of tactics and geographical areas,” Peralez said. “I don’t think it’s really going to hit us like some solar companies that are talking. … You have a lot of solar companies that are rebate chasers.”

But Rodriguez said the new structure will stretch the divide between rich and poor when it comes to solar. He said a lower-income customer needing a 12- to 20-year loan to pay for a solar system will want to install as large a system as possible to offset the expensive monthly energy bills for an often older, less energy-efficient home.

“A larger system will offset the majority or all of their usage,” Rodriguez said. “It’s much more of an incentive.”

On the commercial side, the change basically “eliminated our rebate program,” said Patrick Attwater, CEO of One80 Solar, which focuses only on commercial and industrial installations.

Attwater said that while homeowners often decide to go solar based on “convictions,” businesses are much more focused on the financials.

“If they don’t get a reasonable payback, they’re going to invest that in another capital project,” Attwater said, adding that the new rebate “pushes us into the territory where most businesses wouldn’t be interested in making those investments.”

Luna said the $1 million in $0.60-per-watt rebates provides a “fair runway” for commercial solar installers before the shift to $2,500 per project, then $1,500. Attwater, however, didn’t think that $1 million would last long.

It’s unclear whether ongoing talks between CPS Energy and local solar installers will cause utility officials to roll back any of the changes.

“We want to give it time to work,” Luna said. “We get lots of feedback from the contractors and customers, and that’s true of all our energy efficiency programs. … We adjust where we need to.”