The new solar array on David Thompson’s roof in Maryland Heights isn’t so much an environmental statement as it is a buffer against higher electricity prices.
The panels he had installed last month should shave his monthly utility bills by half, he said, and in about eight years, they will have paid for themselves.
That equation doesn’t pencil out, though, without a little help from the federal tax code and a lot of help from an Ameren Missouri rebate.
“With the rebate, with Ameren paying over half the cost, plus probable increases in the Ameren rates over the next 10 years, it sounded like a move I should make,” said Thompson, 78.
No rebate? No way, he said. Too expensive.
Thompson was one of the last people to take advantage of a generous subsidy for solar panels funded by the utility. The rebate that fueled a huge surge in solar panel installations is drawing to a close.
All those rebates, totaling $91.9 million, were spoken for far sooner than the industry foresaw.
There’s still a federal tax credit available for solar installations, but many potential customers have held off on new solar panels after hearing there is a waiting list for rebates with no guarantee any money will be available.
“By the time everyone’s hearing about solar, Ameren’s crying ‘uncle, we’re out,’” said Kyle Barber, the managing partner of EFS Energy, a small solar installation and distribution shop based in Maplewood.
Ameren and solar industry supporters had hoped the rebate program would last into 2015. But a surge in applications near the end of last year quickly drained the program’s funds.
This led to exactly what the solar installation crowd feared most. Instead of getting weaned off solar rebates like they hoped, the incentives that made rooftop solar affordable for thousands of households and businesses are going from very generous to nothing.
Until the cost of solar gets closer to Missouri’s relatively cheap electricity from the grid, only the most environmentally conscious are likely to pay for the panels in the state.
“We’re going to lose half our employees, at least,” said Rick Hunter, chief executive of Microgrid Solar, one of the largest installers in the area. “And we’re gonna be better off than most companies. … We were up to 75 employees and we’re expecting to be less than 40 before the end of the summer.”
As part of the state’s Renewable Energy Standard passed in 2008, the rebate program has been the subject of legal tussles in the courts and in front of Missouri’s utility regulator since its inception. The renewable energy law makes investor-owned utilities obtain 5 percent of their power from renewable sources this year, and that rises to 15 percent by 2021.
A portion of that is supposed to come from solar, and the rebate program was supposed to get the tiny industry in the state off the ground.
It worked. The Missouri Solar Energy Industries Association predicts the total solar capacity to be around 90 megawatts by the end of the year — a fraction of the state’s 22,003 megawatts of summer generating capacity in 2012, but a big jump from virtually nothing three years ago.
The program can be very generous. It offers customers $2 per watt and maxes out at $50,000. It often covers half the $20,000 cost of a 5-kilowatt rooftop array, a typical size for a residential solar installation.
Last October, Ameren said the cost of the solar rebate program would raise energy costs more than 1 percent, the renewable law’s cap on how much rates can increase due to renewable energy investment. The utility appealed in front of the Missouri Public Service Commission, and the solar industry, fearing a disruption in the rebate payments, signed on to an agreement capping rebates in the state.
In Ameren Missouri’s service territory, the utility agreed to $91.9 million in rebates, about $42 million of which had already been paid out or spoken for at the time.
“We sort of went along with the process there, but not willingly,” said P.J. Wilson, the director of Renew Missouri, which pushed for the state’s renewable energy law. “It was definitely a gun-to-our-head sort of scenario.”
Still, $50 million was left after the agreement was reached in mid-November. Ameren estimated it would last into 2015. Even solar advocates figured they had some time.
It was all spoken for in just a month as businesses and consumers raced to claim their share.
“We had no idea it would be subscribed so quickly,” said Bill Barbieri, Ameren’s director of renewable strategy, policy and generation.
Ameren customers who applied for the solar rebate after Dec. 18 were told to get in line in case any accepted applicants dropped out. About $25 million worth of applications are on hold. In all likelihood, the people waiting, and anyone who applies now, won’t get a rebate.
Solar companies haven’t felt the pain yet. In fact, they’re really busy, because in order to qualify for the full rebate, projects have to be finished by the end of June.
Emily Martin, president of Fenton electrical contractor Aschinger Electric, said the company has five crews doing solar installations full time. Martin estimated the niche should account for about 5 percent of the company’s revenue — all of it packed into the first half of the year. It’s been “a nice bit of business” the last couple of years, she said, but it’s one she knows is going away with the rebate.
“I don’t expect them to have any solar installation work after that date,” Martin said.
Missouri Baptist University sent its application in on Dec. 27, after Missouri reached the rebate cap on Dec. 18. Unless other applications in the queue fall through, it won’t be building the solar installations on its Creve Coeur campus.
“I’m hoping, this sounds terrible, but there’s a good deal of people between the 19th and the 27th that are dependent on the $2 rebate, and they could decline the funding,” said Ken Revenaugh, vice president of business affairs for the university.
Washington University was able to get rebate help for 379 kilowatts worth of solar projects on its buildings. It would have done almost twice that, but about 336 kilowatts worth of project applications went in after Dec. 18, said Phil Valko, the university’s director of sustainability.
NEW SOLAR RIVAL
The state’s solar industry sees its main hope in new legislation reinstating the rebate program. They are pushing a bill in Jefferson City, but other issues are drowning out its backers, they say. With just a couple of weeks left in the session, time is running out, and the bill has not moved out of committee.
“There is support in Jeff City, but it’s just tough getting this deemed a priority,” said Hunter, of Microgrid.
Even though the rebate program is in a voter-approved state law, it has run into the 1 percent rate cap. The solar industry disagrees with how utilities have calculated its effect on rates, but the Missouri Public Service Commission’s approval of the rebate caps has eliminated any incentive for utilities to offer more.
At the same time, “there’s no apparent regulatory process for us to restart rebates,” Hunter said.
For the time being, Ameren can meet its renewable energy requirement through credits it has banked from an Iowa wind farm from which it purchases electricity, its new landfill gas generator in Maryland Heights and a hydroelectric power plant in Keokuk, Iowa.
“We should be able, for the next couple of years, to meet the requirement with relative ease,” Ameren’s Barbieri said.
A portion of the utility’s renewable energy is supposed to come from solar. As the requirement increases, Ameren has a new solar solution. Rather than paying customers to put solar arrays on their roofs, the utility plans to generate the solar power itself.
Last month, it broke ground on a 5.7 megawatt solar array in O’Fallon, Mo. It is considering yet another solar array that could generate as much as 10 megawatts.
Those projects should position the utility to meet the renewable law, Barbieri said. They’re more efficient than rooftop solar, and they benefit all ratepayers, not just those who can afford to install solar panels and have sunny yards.
“It’s far more economical to do it on the utility scale side,” he said. “… Because of that economy of scale it’s going to be a little difficult to rationalize spending additional rebate dollars to achieve what it is we need to achieve for the benefit of all our ratepayers.”
In five or so years, solar advocates are hopeful the cost of solar power and the cost of Missouri’s mostly coal-fueled power will be closer, and the arrays won’t need generous subsidies. In the meantime, the home-grown solar companies are looking at a big drop in business.
Microgrid is expanding into other states where solar is more competitive with traditional power. Barber, at EFS, is diversifying, trying to get more work installing LED lights and selling other energy-saving services.
Barber is still holding out a sliver of hope that the state will pass something that keeps solar incentives from going away completely.
“You want to be optimistic and say, hey, there’s still a chance,” he said. “But you also want to be a realist.”