May 24, 2014

Modesto Irrigation District cancels solar rebate program

The Modesto Irrigation District has pulled the plug on a program that provides rebates for installing solar-powered technology due to higher than expected demand.

Saying this year’s fund for solar rebates was depleted after only four months, the Modesto Irrigation District has pulled the plug on that incentive, apparently leaving dozens of applicants and several solar contractors in the lurch.

The abrupt shutdown means homeowners on the verge of applying can forget about being paid thousands of dollars for investing in sun-powered technology on their rooftops. Without that incentive, many could cancel installation contracts, hurting solar companies as well.

“MID put the screws to both of us,” said Modesto homeowner Don Goursky, among those left in limbo.

The district had advertised solar rebates on its website as late as last week, but won’t honor applications submitted during the two weeks before.

When questioned, MID energy services supervisor Bob Hondeville apologized and blamed the program’s popularity.

“If we had seen this coming earlier, we would have made every provision” to avoid surprises, Hondeville said. “It got away from us. Demand was higher than we suspected.”

Some solar contractors are angry.

“It’s quite ugly,” said Justin Krum, owner of 1st Light Energy, a Manteca company with roots in Modesto and Oakdale and branches throughout California, New Jersey and New York. The firm stands to lose as many as 60 contracts, he said, because MID failed to warn people that rebate money was running low while his sales force continued lining up business with rebate assumptions factored in.

Mike Zweifel, the district’s solar program coordinator, said perhaps contractors and customers will “maybe both give a little and renegotiate” their deals.

But solar installer Dale Kujawski said, “There’s not enough (profit) margin to work it out. This is really going to affect us.”

Kujawski, owner of Honey’s Air in Modesto, ran newspaper advertisements noting MID rebates as late as last week, and said he didn’t receive notice from the district that the program was canceled until after The Modesto Bee started asking questions.

“How can they do that?” he said. “Any notice whatsoever would have been wonderful.”

A 2006 state law, Senate Bill 1, requires utilities to provide solar rebates, but each has some control over how much to offer and periodic adjustments. For each watt of capacity in home systems, MID initially paid $2.80 and has reduced that amount each year, dropping to $1 per watt in 2013 and to 80 cents this year.

If their systems are efficient, solar customers also earn performance rebates for the first five years. They receive federal tax credits as well, and their electricity bills are often substantially reduced or eliminated.

People contemplating “going solar” generally compare financial pros against cons – substantial costs to install panels and related equipment – and try to figure out how many years it might take to recoup the investment. Some choose to avoid installation costs in lease deals with contractors; they aren’t eligible for installation rebates from MID, which caters only to system owners.

Rising demand

Numbers of customers taking the no-rebate lease option rose from one in 2011 to three in 2012, then skyrocketed to 82 last year. But the rebate program has been even more popular, going from 75 participants in 2012 to 261 last year and attracting 127 this year before MID shut down the program and backdated the application deadline to May 1. At that rate, MID might have been saddled with 381 new rebate requests this year – a far cry from 21 six years ago.

In the past five years, MID has given $17 million in solar rebates, hitting a high mark of $4.5 million in 2013. But leaders set aside only $4.2 million for this year.

That weaning is exactly what state legislators envisioned when the California Solar Initiative was introduced seven years ago, but the effect means less rebate money to spread among more applicants. And the district was caught flat-footed.

“We set the budget, then saw a huge increase in popularity,” Hondeville said. “We were thinking we’d have enough to play it out, but demand outpaced our projects significantly.”

That’s little comfort to those whose paychecks rely, at least in part, on consistency, and to customers planning to go green. MID never before has run out of rebate money before the end of the year.

“Somebody should have been checking,” Goursky said. “For it to go away so abruptly seems odd to me.”

Krum said, “I can live with shutting down the program and waiting till next year. It’s just the way they did it. They gave no indication and led us 100 percent to believe (everything was fine).”

No incentive needed

For some, the allure of harvesting sunshine is greater than the rebate promise.

Justin Schroeder sees it both ways. He gladly accepted a $2,600 MID rebate when he had 10 solar panels installed on the roof of his Modesto home last year and liked the plunge in his electric bill. He also bought a Nissan Leaf electric car for in-town trips and can go 85 to 100 miles on a single charge. Plus, the car brought a $7,500 tax credit, a $2,000 state rebate and a $3,000 air-quality rebate from the air district.

“The car is fine for the three of us,” he said, referring to his wife and daughter. “You get 100 percent torque from the start; it’s real quick and zippy – the perfect car to have around town.”

But his solar setup wasn’t large enough to power the house and car. “I wanted to see that zero balance and drive the car around town for free,” he said, so he ordered 10 more solar panels. MID would not grant incentive money to the same customer within a year, so Schroeder got no rebate for the addition to his system.

Of MID’s 763 customers with solar panels, 647 – 85 percent – received installation or performance rebates. Solar customers throughout the district in 2008 had systems capable of generating 346 kilowatts of electricity; it’s up to 14,047 kilowatts now, a mind-blowing increase of 3,960 percent, but only 2 percent of MID’s total load. The district relies heavily on natural gas to produce electricity, and to a lesser extent, windmills and a huge solar plant on McHenry Avenue.

Whether the end of solar rebates for the rest of 2014 will dampen enthusiasm for solar is yet to be seen.

Said Hondeville, “We get no benefit out of frustrating our customers and vendors. We regret this and will learn from our mistakes, and will make sure it does not happen again.”

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