Solar Solutions

What’s the Difference going Solar in 2015, 2016, or 2017?

The best year to go solar will be 2015 because at its end, on December 31^st, “Net Metering” in California will expire.  Net Energy Metering (NEM) is shorthand for the PUC rule which instructs utilities to credit a customer’s consumption for the generation of CLEAN energy on a one-to-one basis.  A new version of NEM is in the works but it will not give you full or equal credit for the power you generate. At the end of 2016, the 30% Federal Investment Tax Credit is scheduled to expire for individuals and businesses. It may be renewed or reduced, but that will require joint action by Congress and the Executive branch, a degree of cooperation we doubt is likely.  The combination of these two events will severely impact the economic value of going solar for businesses and homeowners, as the new NEM pricing structure will diminish the value of the savings and the lower or non-existent tax incentives will increase its cost.  The good news is that any person or entity going solar during 2015 will be guaranteed full value for their energy for the next twenty years and receive a 30% tax credit. Solar will still make sense, just for fewer people: people who have high consumption, can make Time-of-Use rate tariffs payoff, people want to “fix” their costs, people who want to help the environment or protect their energy future. Visit our Hero Program page for more information.

What will happen after the incentives that stimulated the growth of California’s solar industry have disappeared?  We can look to the past because this is actually California’s third solar boom.

A History Lesson with AMECO!

The year was 1986,  and on January 1^st the solar tax credits expired and rebates were not extended.  But maybe we should go back even further, so let’s start in 1978. The federal and state governments started giving away up to 55% tax credits to go solar and provided rebates in a program administered by the utilities. The solar industry was in its second boom! By 1985, there were over 50,000 Californians employed by the sun when solar thermal was the technology of choice.  Using solar energy, water would be heated by the sun. We still do it today, but using solar to make electricity has become more popular. Going back even further, solar heating actually had its first boom in the early 1900’s. It was the first time you could have hot water

without using your stove.  The LA Times states one third of Pasadena homes had solar in 1907. In 1915, we discovered oil and natural gas in Southern California, and solar fell to the wayside until the 1970’s, a period called the Energy Crisis, which was hallmarked by gas shortages and lines at the filling station.  During the subsequent solar boom, AMECO opened two more offices to serve the demand. One of our ads from the time went like this:

Is your electric bill killing you?

You could travel 12,000 miles in your car on the energy needed to heat your water by electricity for 1 year!

Towards the bottom of the ad, we actually state, “This is not a scam! There are no gimmicks here!” The industry was tainted with deals that were too good to be true. Some companies offered a 95% “discount” for going solar, the business was a magnet for shady operations intending to join the gold rush and reap quick profit. Businesses would inflate the price and offer cash discounts because their revenue was from the rebates.

“Everybody who had a garage was beginning to manufacture hot water systems for your home, so the reputable companies got lost in the shuffle with the non-reputable,” said Susanne Garfield of the California Energy Commission. We’re proud to say that some of our home-made solar panels are still working today!

Anyone who could sell was trying to sell solar. Les Nelson, the former president of CalSEIA, put it best, “The systems were sold with impossible promises about what they could do, and when the tax credits expired, so did the vast majority of companies.” Sound familiar? Some of these companies went out of business the old-fashioned way with bankruptcy, but many companies simply pulled out of solar and went on to the next big thing, MLM’s selling hair spray! Their only value proposition, 55 to 95% in tax credits and rebates, were gone and so were they. The consumer protections California puts in place such as long term warranties were no good after the companies disappeared. Customers were left with leaky plumbing or roofs and cold water because a warranty is only as good as the company behind it.

How come our competitors claim there’s no way we’ve been installing solar since the 1970’s? Well the industry crashed. California lost 96% of the solar jobs within a year. 48,000 people had to find alternative employment because the fair-weather companies had gone with the wind. How did AMECO make it through? We scaled back down to one office.  We had value propositions that surpassed price and our quality installations meant that we weren’t wasting our time with warranty related repairs. We also adapted to installing more solar pool systems. As far as household domestic hot water we had an uphill battle explaining the economics in an era of high interest costs and low energy price prices. However, if you’re heating a lot of water, it’s going to cost a lot of money to heat it. If you have a family of 5 – that’s a lot of hot water and solar thermal would make sense for you.  If you want to spontaneously swim in your pool and not spend $500 a month for that privilege, solar pool systems would make sense for you. Our competition was never other solar companies – it was always the utility monopolies whose never-ending price hikes were muted by their pay-pay-pay as you go business model.  When we  worked with CalSEIA to promote NEM rules, we helped to develop and promote the solar electric industry in our state.  We also helped the Contractor’s State License Board form the specialized solar contractor’s license your installer should have (C-46).  By the late ‘90s and early 21^st century,   we had already installed the first grid-tied solar electric system in in many Los Angeles area communities (including Catalina)!

The Future of Solar in a Post-ITC World

Our industry has swelled to employ 140,000 Americans.  We outnumber steelworkers, coal miners, ranchers and many other industries. By 2017, there may be many fewer jobs in the Green Energy sector but this is true – The best companies will continue. Electricity isn’t going to be cheaper in 2017, and the pay-as-you go plan will still make sense for many. The industry is going to become more honest with better educated employees. The horror stories of leaking roofs, and poorly installed systems will hopefully become a thing of the past as the bad installers who were just in it for the money die out. Most of the roofers, electricians, carpenters or siding companies that became solar installers will go back to their core business.

On a national level, solar will lose any footholds it gained in solar-averse states like Ohio. States with strong incentives like New Jersey won’t be nearly as hurt if the states recognize the threat to their economy. States like California and Hawaii won’t be hurt as much because our electricity is already pretty expensive with climate change legislation already on the books. Many optimistic studies show that solar energy will be at parity with conventional fuel in a majority of states by 2016 or soon thereafter.

The solar industry is going to be hurt, but those affects should remain relatively domestic or within the US. Solar demand around the world is great enough that it won’t be affected as much and prices should remain relatively stable. Domestic solar panel manufacturers might not see too hard of a hit as they switch from the US domestic market to an export market. There will still be a large market for domestic utility-scale solar to meet RPS goals. During the supply shortages several years ago, even American-made solar products were being exported to Europe while the domestic market scrambled for supply. This global market will help keep materials at a stable price nowadays & in the future allowing solar to still be viable, especially for high energy users.

We should also see growth of solar-repair businesses. The solar market grew exponentially over the last decade, and with original installers going under, many more companies will be specializing in servicing for those systems, a service that will be especially needed by those orphaned by the original installer.

AMECO is ready for 2017 because we’ve gone through this before. We didn’t succumb to explosive growth during this solar boom because we’re in it for the long run. We knew incentives would leave, and we know it won’t be pretty. Our customers know the value of a quality solar system and have been referring us to friends and family for the past 40 years. Over this time, we have many repeat customers, sometimes three times and more, as they outgrew their homes and offices, but knew that going solar with AMECO had been a great investment!

 1993 LA Times Article  & Other Sources Used

Solar isn’t going to get much cheaper if we don’t do anything about soft costs.  Soft costs involve things other than the equipment and labor. They include permitting, interconnection regulations, customer acquisition, and so on.  Permitting adds time and cost to solar systems.  Plenty of communities have streamlined their solar permit process to make it easy to go solar while also  reducing operating costs  for the city or county. Germany is famous for its double-sided one page for solar permitting.

Standardizing the permit process across multiple jurisdictions would be very  helpful for installers.  Many times a contractor needs to wait at the  building department or make an appointment to speak with an inspector or plan checker to know what each permit application requires.  If no appointment system is available, it’s hit or miss and if you are lucky  and the relevant official will be there when you show up. There are at least 423 building departments in California, and each one is different in procedure.  “Getting information on how to file a permit in California shouldn’t be more complicated than applying to college” says Pat Redgate of AMECO Solar. “Imagine having to travel to each school to learn what information is needed to apply or finding out you needed to meet with an  admissions officer who left for the day or is simply too busy to see you.  Certainly most would never apply to a school out of state…or drive very far to apply –  it would cost too much.  This is how solar installers feel.  It takes a lot of time to get anywhere, especially in LA and Orange Counties, and having to make multiple trips can add significant cost to a system.”

Patrick Redgate, AMECO’s President & CEO, is working with the Governor’s Office of Planning and Research (OPR) to make the permit processes more efficient and less costly for solar companies and building departments.  OPR’s eventual goal is to create a standardized version of a permit application to submit  to any Californian city. It will be limited to residential solar systems that are under 10 kW, which can be uncomplicated and pretty similar.  There’s no reason that permits should vary from city to city if we, as a state, can determine what is safe and appropriate. It takes time and teamwork to agree on what  is safe and appropriate since solar photovoltaic has only made an impact on California residents since the turn of the 21^st century. This is why OPR’s first goal is to standardize the required information on a permit. If an installer knows what each city needs, that is the first step to a truly streamlined application process.

Another effort to reduce administrative soft costs for PV and Thermal solar adoption is Assembly Bill 2188, which recently passed  two senate committee hearings. Senate Finance Committee.  AB 2188 is a step in the right direction. Although it allows cities to opt out of particular features of expedited permitting it will direct cities to follow “best practices as defined in SunShot permit streamlining documents.”  OPR and CALSEIA are working to make AB 2188 a more effective piece of legislation by helping to define best practices and standardize the application process.

We need renewable energy moving forward and distributed generation is one of the most sustainable ways to accomplish our climate goals.  At the end of the day, we will all be enjoying cleaner air and better karma or will we go dark because  we couldn’t meet peak demand on a sunny day.

The right time to go solar might not surprise you.  There isn’t a specific day like, Tuesdays when you should buy airplane tickets, or Super Bowl Sunday to buy a car.  Solar construction can happen year round, so if you’re looking for the best month… it was in March #Sorry.  March gives you the best year one production because it’s right before the summer, and the panels are fresh and clean.    But you should know (and probably already do…)… the best time to go solar is NOW!

Equipment costs have steadily decreased for decades, but we are at the bottom and have been there for most of 2014, as can be seen in the graph below.  Asian manufacturing brought prices to an all-time low because of their scale, and fierce determination to own the solar market… Some have said that there may have been some shady trade practices #Dumping as well.   The US Commerce Department has made steps to end this trade war and is planning to levy varying tariffs on some foreign made solar products.  When the levies are imposed, solar module prices (not system prices) are expected to rise 18-35%, and we’ll see this take effect during the next 6 months.  Even with more expensive solar panels on the horizon, you’ll still want to go with an experienced company #40Years because there’s going to be a lot of misinformation, possibly counterfeit brands or non-CEC certified products on the market soon, as the IOUs (SCE, PG&E, SDG&E) rebates have ended across the state.  These rebates required the verification of modules being installed. The Solar Program Administrators and the PUC do not want to be forever in the business of policing the solar industry.

Solar’s unprecedented growth has been due to lower prices and to new financing options like long term low interest personal loans, other third-party financing such as hero program, leases, property tax loans and power purchase agreements. I have good news and bad news though.  Our economy is improving which usually means that loan and lease interest rates are going to come back up which will affect your  payback and return on investment.

California installed more rooftop solar last year than they have in the last 30 years!  The industry has grown rapidly and will continue to grow, but the most cost effective time to go solar, is NOW.  Solar boomed in 2013 because of good incentives, lower costs, and improved financing.  Incentives are meant to help industries get started and test business plans with less risk, like Mosaic, but they don’t last forever.  Almost all of the local utility rebates have been claimed and the 30% Federal Investment Tax Credit will be reduced at the end of 2015.

If you’re still not convinced to go solar, your future bills should convince you. Electricity rates go up 5-8% per year.  LADWP customers will see their rates increasing 11%. The sooner you go solar, the more you’ll start saving and sooner.  The average Californian that goes solar will save over $50,000 over the life of the system.  What could you do with that extra pocket change?

Give us a call because NOW is the right time to go solar (888) 595-9570

Finally there is an event  for the Solar Day of Action in Southern California! There is a national event in DC on June 21^st celebrating the Solstice and the solar industry.  It was actually really starting to bug me that there wasn’t anything in the sunny area… obviously not to the point where I would actually do something about it. #Lazy

Come join Organizing For Action’s West Los Angeles Solar Day of Action!  “Join OFA volunteers for a brief talk on the economic and environmental benefits of solar power and a free screening of the documentary ‘Here Comes the Sun’ at the Mar Vista Public Library on June 21st. Learn about how solar energy is part of the solution to climate change, and how the switch to solar energy is not only possible, but can generate significant benefits in our communities and in our pocketbooks. #PutSolarOnIt” says the event page.

Why should you attend? Solar is growing and benefits society tremendously.  Aside from the countless environmental benefits, solar creates thousands of jobs and securitizes us for the future. Solar has already grown at crazy rates, but it’s still under attack.  Utilities and politicians nationwide are continuously trying to put limits and fees on solar installations.  Help us show the support solar deserves on the longest day of the year!

Lazier than me? Don’t worry, I’ve created three levels of laziness participation:

“Back Scratchers Double as Reaching Sticks” Level

o   There is a Cute Pet Photo Contest with the prize being $1,000 credit to solar! Good luck beating Cody!

 “But the Remote is Over There” Level

o   Climate Reality is also running a #PutSolarOnIt Selfie campaign. Check out ours and create your own!

“It’s Sunday Already?!?” Level

o   Be sure to post and share the social media statuses on Saturday and include #PutSolarOnIt in posts.  Maybe schedule one so you can sleep in though.

Event Details:

Time:

Saturday, June 21, 2014 10:00 AM – 12:00 PM

Location:

Mar Vista Branch Library

Los Angeles
, CA 90066