Update: A few weeks after writing this post California’s Public Utility Commission (CPUC) did raise the rebate rates for its CSI Thermal program.
Despite a huge pot of incentive dollars available for commercial and residential solar hot water, California’s entire CSI Thermal program remains in its earliest (and richest) step one phase for both residential and commercial property owners. Although there’s been some interest, there’s still a lot of solar thermal left to be installed for both businesses and home owners. Let’s look at the current numbers:
Residential Solar Water Heating
According to the CSI Thermal program’s public incentive tracker for gas, less than 2% of the step one incentive money has been allocated in PG&E, CCSE/SDG&E, and SoCalGas territories. In these territories, an $1,875 state rebate is available for single-family residents, plus the 30% Federal Investment Tax Credit.
We believe that the reason for the slow uptake in the solar thermal and space heating residential sector is that natural gas prices remain at historical lows, causing solar thermal to have a relatively slow return on investment.
To boost more home solar thermal sales, either manufacturing and installation costs for OG-30O solar thermal systems have to come down—difficult—or natural gas prices have to go up—unlikely. Another short term scenario would be for the CSI Thermal program to increase the incentive amount for residential solar hot water, making solar thermal more competitive with the current price of gas. Finally, the California Public Utilities Commission (CPUC) could change the rules and allow incentives to apply to solar pool heating. However, solar pool heating already has a relatively fast return on investment without incentives, so that solution is unlikely.
Commercial Solar Water Heating: Mixed
The commercial side of the CSI Thermal program for gas customers is somewhat better. Up to $500,000 per installation is available to apartment buildings, nursing homes, hotels, hospitals, laundromats, condos, and other multi-unit residential building owners. The incentive pool is slowly drawing down in PG&E and CCSE territories, but commercial property owners in SoCalGas territory (the Los Angeles vicinity) have had surprisingly little uptake, despite the availability in new solar thermal PPA financing opportunities.
In PG&E, of the $11,700,000 available in step one, $3,993,244 has been allocated, or about 34%. So, there’s definitely been some interest there, but still about 2/3 left at this ($12.83/therm) incentive level.
In CCSE/SDG&E territory, the numbers are even better. Of the $3,000,000 available in step one, $1,632,745 has been spoken for by various commercial applications. That’s a respectable 54%, so rebate information and solar thermal financing appear to be having an effect in San Diego, which CCSE represents.
For whatever reason, commercial and apartment building owners are not getting the message in the Los Angeles and Southern California basin, represented by the SoCalGas utility’s numbers: $15,300,000 is available in step one, yet only $994,574 (about 6.5%) is spoken for.
We think there are multiple problem here. First is the lack of public awareness about the incentives. Second, there is the lack of awareness or understanding about solar thermal PPA financing, mitigating upfront risks. Third, financiers for solar thermal PPAs often seek very large projects, leaving out smaller commercial installations that might otherwise be aggregated into a fund. Finally, as discussed in an earlier blog post, there is a lack of solar thermal installers in the L.A. area that are even eligible to receive the CSI Thermal incentive. Training and outreach are needed to plumbers and contractors who could transition into the market.
None of these issues will be addressed overnight. In the meantime, solar thermal installers in Los Angeles who do qualify for the incentive must overcome the other challenges of marketing and public awareness and solar thermal PPA financing for smaller installations.
In addition to the regular CSI Thermal program, a new low-income housing program for solar thermal has also been launched with an even richer incentive. More details here.
Free Hot Water’s engineering, design, and procurement services are here to help solar thermal installers. We also have solar thermal PPA finance contacts that may help our installer customers to finance projects. Please feel free to contact us to discuss how we can help your CSI Thermal project move forward.