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Slowing CPS solar rebates hurting installers

For the would-be clean-tech capital of the universe, the report from a slate of nervous solar installers gathered at Council's Citizens to be Heard session last week was troubling. After years of solar gains thanks to generous subsidies under CPS Energy's three-year-old STEP program (Save for Tomorrow Energy Plan), which set aside $849 million to fund a number of incentives aimed at shrinking energy use by 771 megawatts by 2020, the tide of investment seems to be rolling backward. Installers say that's counter to promises made in the past — promises that inspired many to open offices here and invest locally. "We actually moved here from Dallas. We're one of those companies that investigated your leadership, your energy leadership, and we were inspired by that, so we went ahead and packed up and moved to San Antonio," CAM Solar's Tony Contreras told Council.

Last year, CPS dumped $3.4 million into the solar rebate program, but after solar installations boomed the utility had to shuffle cash from other STEP programs to boost the rebate amount to $6.2 million, essentially front-loading the program. Then came the CPS announcement this year that just $3.9 million for rebates would be available for 2012. It was enough to make Contreras and others cut staff (CAM went from 12 to eight employees). Negotiations with the solar industry eventually got CPS to prime the pump to about $8 million, but enough projects already sit in the pipeline to drain the fund by summer, spelling disaster for local installers who currently depend on rebate-associated projects for over 90 percent of their business, said Solar San Antonio's Executive Director Lanny Sinkin, who estimates there's enough business to justify $14 million in rebates this year.

Further complicating matters, CPS announced this year it would lower the rebate from $2.50 per watt to $2, offering a two-week grace period for companies to hurry up and file applications to score the higher return. Applications flooded in and backlogged the system, CPS spokesperson Lisa Lewis said.

The number of commercial and residential solar arrays has boomed under the rebates. Between 2008 and 2012, residential installs have shot from 4 to 259, while commercial installs have shot from 1 to 50. But that growth is jeopardized if new investments aren't made, Sinkin said. The utility, he told council, is sending the message that the solar rebate could phase out, "even though that would lead to the collapse of the solar industry here."

Lewis said the return on investment with solar is simply not as dramatic as other energy-savings efforts within STEP. While solar returns 65 cents on the dollar, HVAC rebates, for instance, bring in $2.75 for every dollar spent, she said. "The value that we get from solar rebates is certainly that it's helping to incentivize the market, but again there has to be some balance," she said.