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.
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.”
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.
“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.
“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.”
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.
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).