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Board approves more solar rebates, continued net metering, new fees
By Tracy Idell Hamilton on May 20, 2014
The CPS Energy Board of Trustees unanimously approved a program Monday that will add another $21 million in solar rebates to the $30 million awarded since 2008, keep the current net metering system in place and develop a solar leasing and community solar project for customers who are unable to install an individual system.
The program also includes a fee structure to recover CPS Energy’s cost of service, which must be approved by the San Antonio City Council.
“Solar is a centerpiece of CPS Energy’s strategy for the future – both utility-scale and rooftop,” said Cris Eugster, Executive Vice President and Chief Generation and Strategy Officer.
But the utility must transition from an incentive-based model to one more market based if it is to be sustainable as more customers put solar on their rooftops, he told the board.
While only a small number of customers have installed solar thus far, the growth rate has been
400 300 percent in the last three years, based largely on what Eugster said is one of the more generous rebate programs in the country.
CPS Energy is adding another $21 million to its rebate program because it wants to continue to support the industry, he said. The fees will cover the costs of maintaining and upgrading the grid, also known as the “cost of service.”
A solar customer whose system is large enough to zero out his or her bill still relies on the grid as something like a battery, taking power a portion of the day when the sun is hottest (typical solar production is about five to six hours over a 24-hour period). The grid then supplies power to that home over the remaining hours. But they don’t pay anything toward the cost of maintaining that grid or other necessary infrastructure.
Proposed fees include a one-time commissioning fee of $450 for residential customers. Commercial fees would vary based on the size of the system.
New solar customers will also pay a monthly grid fee of $1 per kW per month. For a typical 5kW system, that’s about $5 a month. Grid fees will grow to a maximum of $17.50 a month as the program is phased in.
Existing customers will be grandfathered under the current program.
CPS Energy will continue at $1.60/kW for the first 10 megawatts of the 25 MW goal. That translates to an average residential rebate of roughly $10,000 per residential system and $60,000 per commercial system. Over time, as solar prices continue to fall, the rebate will be reduced.
Eugster said Monday that if prices do not fall as anticipated, the rebate amount could be revisited.
The goal is to add another 25 MW of solar distributed generation to the 15 MW of residential and commercial systems already producing clean, renewable power across San Antonio, while at the same time creating a stable business model that will allow CPS Energy to even more aggressively promote rooftop solar.
As the Rivard Report’s Iris Dimmick wrote, Mayor Julián Castro expressed concern with the rebate and the new fees, as did local solar installers:
Local solar companies worry that this 10 percent decrease in the cost of solar may be too ambitious due to pending tariff cases.
“Ten years is the sweet spot for getting people to invest in solar,” (Solar San Antonio Executive Director Lanny) Sinkin has said in previous interviews. “Beyond that, people have a hard time imagining the return (on investment).”
Eugster’s presentation to the board noted that a 5.6 kW system currently has a “simple payback time” of nine years; that would rise to 10 with the fees and eventually to 12 as the rebate was reduced over time.
Castro said the City Council would study the fees further before voting, likely in June.
Objectives of the new solar plan include:
- having a comprehensive plan for addressing rooftop solar over a several year period,
- creating certainty to the amount of rebate dollars available in that time period,
- phasing out the subsidy for rooftop solar as prices continue to come down and
- adding options for customers who cannot install solar on their property.
To that end, CPS Energy is working to develop solar leasing and a community solar project for customers who rent, whose rooftops are not situated well for solar or who can’t afford up front costs to buy a system.