Those who work in the solar industry worry that the new solar incentive program that the Los Angeles Department of Water and Power approved earlier this week will not be any incentive at all for residential installations.
The utility suspended its solar program in April when it said applications were outpacing the budget by three to one. Utility officials say the new program structure will allow the incentives to continue at a reduced rate so the money will go farther and last longer.
Solar industry leaders say the new plan will stifle rooftop solar by cutting incentives 30 to 40 percent.
“Our view is that there was nothing that needed to be done on the residential side,” said Ken Button, president of Verengo Solar. “The real big increase in demand was not coming from homeowners. Residential solar installations accounted for just 8 percent of the growth.”
Most of the demand that broke the utility company’s budget was coming from companies and businesses installing large-scale systems, Button said. The residential realm of the solar business was just beginning to pick up, and Los Angeles still had a lower ratio of residential solar installations to the number of homes than other California cities.
“With the reduced incentives, homeowners would pay more for electricity with the installations than without,” according to a release put together by several LA-area solar companies. “And the payback period—already the longest among major utilities in the state—would be extended to as many as 14 years.”
The utility has argued that it had to reduce its incentive package because it was one of the most attractive in the state and thus one of the most popular. Industry leaders said in their announcement this week that the new program makes LA the least attractive place in California to invest in solar.
“I’m a proud supporter of renewable power,” Greg Simas, a Sun Valley homeowner who installed solar panels on his roof nine months ago, was quoted in the release. “But if I had been offered such a low subsidy I would not have signed up for the solar program, and neither would many of my neighbors—even the ones who envy my power bill and want panels of their own. How many people would knowingly sign up to lose money?”
While the new incentive program is tough for solar installers in general to swallow, they say the new incentive structure for leased solar arrays is so poor it’s likely to stop the most popular option for residential installation in its tracks.
The incentives for lease systems previously allowed homeowners to install solar with very little money down and monthly payments equal to their old utility bill if not slightly less.
The new incentive will cause residential solar leases to cost homeowners more than they currently pay, according to release from industry leaders.
“Los Angeles should be a leader in residential solar, and even at current program levels the city is far behind most every other comparable city,” said Ethan Sprague, director of government affairs at SunRun, a home solar company that provides solar leases in Los Angeles.
Button said he and others in the industry are contacting the LADWP board and encouraging residents to speak up and draw attention to the damaging effects of the utility’s new solar incentive program for residential installations. He hopes they will make some progress and see some change.
“I’m a local,” Button said. “I’m from here, and we had plans to expand our business in LA. We had to put those on hold, and it doesn’t look like it’s going to pick back up.”
Photo: Chris Meehan / Clean Energy Authority.