Monday, April 4, 2011

California Solar Consumers at Risk of Losing Protection

The popular California Solar Initiative (CSI) program, which provides rebates for solar installations or pays for solar energy generated from installations, has been so popular among residents, businesses and public agencies that it’s set to run out of money sooner than expected. What will happen if state lawmakers decide not to extend funding for the program?

Aside from losing a big incentive to make going solar more affordable, consumers also will lose some important protection from unscrupulous solar service providers.

A panel discussion at SolarTech’s Leadership Summit on Wednesday described what Californians will lose if CSI sunsets ahead of its original end date of 2016. The $2.2 billion, 10-year program provides rebates for installing solar electric systems or pays for the electricity produced by solar systems (required for systems larger than 30KW). The program, launched in 2007, aims to install 1,940 MW of solar through 2016, including 1,750 MW for customers of the three largest investor-owned utilities and 190 MW for low-income families.

The main, 1,750 MW program has attracted a lot of demand and if you count both the completed and proposed projects for this program, only 477 MW remain unclaimed, according to the California Public Utilities Commission. The incentives for non-residential installations already are running out, so two utilities – Pacific Gas and Electric as well as San Diego Gas & Electric – started to put applications on a waiting list late last year. A big reason the money is drying up is because some solar systems are producing more electricity than expected.

The CSI program includes consumer protection measures that will not be around if it ends, and solar energy advocates are hoping the state Legislature will continue it or even create a permanent rebate program. The CSI’s rules require solar panels and other equipment that go into a solar electric system to be certified by organizations such as the Underwriters Laboratories, and they must meet other requirements to get on a list of eligible equipment for claiming the incentives.

“The program provides standards for equipment and installations that help to ensure that customers are receiving systems that perform optimally,” said Sara Birmingham, director of western policy at Solar Alliance.

The CSI also helps to police the price installers charge consumers. Last year, CSI administrators added a rule that requires installers to justify why they would charge more than $14.70 per watt. The limit is “part of efforts to protect consumers from over-priced solar systems and thwart fraudulent federal tax claims.” Molly Sterkel, who oversees the CSI program at the CPUC, told us last year that consumers should always get bids from three installers to get a good price comparison.

Sterkel moderated the SolarTech panel Wednesday and said the soft cap was put in place after the state and the three utilities involved kept seeing projects priced at $15-$17/watt. As of January this year, residential solar systems were priced at an average of $8.70 per watt for a 4 KW system, according to the CSI website.

CSI rules also require the solar systems to come with warranties. Although installers will likely have to continue to include warranties to meet other state and federal regulations, they won’t have to face scrutiny from the CSI administrators if the program goes away.

An indirect impact of losing the CSI is the collection of installation and pricing data that help the state design solar incentive programs, said Sue Kateley, executive director of California Solar Energy Industries Association. Kateley, who is advocating for a permanent rebate program, added more consumer protection measures could be added to CSI.

“When you look at the CSI data and the top 10 installation companies, one of them is self installed. Some of them may be homeowners installing the systems. But many of them might be unlicensed contractors,” Kateley said.

She also noted that many consumers today are able to add solar to their rooftops by signing up for leases or other financing options. Some consumers probably don’t fully understand the terms of their contracts, which commit them to paying for the equipment or the solar electricity generated for around 15-20 years.

“Residential (power purchase agreements) and leases are unregulated. The terms and conditions shift, depending on the companies. If the leasing companies go out of business, I can tell you that the warranties will just be a piece of paper,” Kateley said.


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