DC Government Inaction Stifles Explosive Growth of Solar in DC

By Emily Steiver on July 3, 2011

Thanks in part to a generous solar rebate program offered by the District of Columbia, more than 450 families have installed solar panels since 2009.  This is exactly why the DC Council originally passed the legislation creating the program.  As an organizer of one of many solar neighborhood cooperatives, I had been receiving questions about going solar from neighbors and residents from across the City on a daily basis. Last year, installation crews from local businesses were seen all over DC — with new projects being completed every day.  Looking at the numbers from across DC, 68 projects were completed in 2009, then 218 projects in 2010.  Projections were that solar installs would double each year – rising to 500 in 2011 and more than 5,000 per year by 2015.  Solar energy became a frequent conversation topic on the street, in the workplace, and on social networking sites – with solar enthusiasts like myself boasting about receiving a “credit balance” on our pepco bills.  Apparently, the solar revolution had finally hit DC, but this year has been much different.

As businesses ramped up their hiring and more people began doing the research needed to go solar, all of a sudden, a significant slowdown occurred in the solar industry here in DC.  Why did this happen, and what are the prospects for those that missed out on the first wave, but are still interested?  In a nutshell, a series of missteps and planning problems within DC government is primarily responsible for the slowdown in solar growth and job loss within the industry.   The lack of decision-making and planning has created significant uncertainty, which is holding residents back from signing contracts to install solar.  Let’s examine first how the solar slowdown happened, and then go through some ideas on how to restart our solar momentum in DC.
For those of you new to solar, the economics of financing your project rests on what I will call a four-legged stool.  The legs are:
1)      a 30% Federal Tax Credit on the full amount of the system cost;
2)      local DC rebates (which during the boom averaged $11,000 per project);
3)      carbon credit sales (known as solar Renewable Energy Credits or sRECs) that allow you to “sell” the green attributes of your solar system for cash, and
4)      future costs savings that accrue as solar panels produce electricity – essentially net metering that reduces your pepco bill typically in half.
The first wave of solar installs in DC received an almost too good to be true deal in which the subsidies above would pay for 70% – 100% of the average system cost.  The DC Rebate was an essential component drawn from a $2 million per year trust fund which is financed by a small surcharge on your pepco bill.  It is not difficult to imagine why the DC Rebate program became quickly over-subscribed. The combination of high demand for rebates, and the raiding of the energy trust fund by the Mayor and DC Council (essentially cutting the $2 million yearly total in half) caused the Department of the Environment to close the waiting list to new projects, and propose a reduction in the rebate amounts for those that were on the waiting list before it closed.  The proposed rebate reduction, which has not officially been finalized, would allow more projects to receive rebates at a smaller amount.  The rebate program sunsets in 2012 (though the pepco energy surcharge does not), meaning that those not on the list now have no current option for applying for funding, but that ratepayers will still be funding a program that will not exist after 2012.
What does this mean for those of you stuck on the existing DC rebate waiting list, or those of you that want to now want to apply for a rebate?  First the good news:
1)      solar prices are dropping fast – a system that would have cost $35,000 in 2009 will now cost only about $22,000;
2)      the Federal Tax Credit is still available;
3)      the value of sRECS, which had dipped recently, will gradually stabilize when the DC Council passes the Distributed Energy Generation Bill (19-10) next week.
So, assuming $22,000 for an average system, minus $6,600 in Federal tax credits leaves an upfront system cost of $15,400.  Assuming $2,000 per year in energy credit payments to you and savings on your utility bill, then a simple payback will be reached in about 8 years. Feedback from residents interested in solar indicates that the “tipping point” for deciding to go solar is a 4-5 year payback — which is where the DC rebate program comes in.  Many of you waiting in the wings do not want to move forward with an installation with an 8-year return on investment, knowing that you might miss out on rebate money.  So, you are patiently waiting to hear what DC is doing with the rebates.  “Patiently” is the operative word as there has been no information shared on the program’s direction.  For argument’s sake, let’s assume that DC were to provide you a $4,000 rebate.  Your return on investment would then inch closer to that magical 5-year payback, and perhaps the solar revolution would enter a second phase.  While those on the existing waiting list will probably get some rebate money in 2012, re-opening the DC Solar Rebate program to new applicants will spur homeowners to spend a significant amount of money on projects that will employ DC workers and bring tax money back into the city.
Our city-wide cooperative organization, DC Solar United Neighborhoods (DC SUN), has met with government officials to question what the future plans are for solar rebates.  After all, we are still paying the energy bill surcharge to fund investment in solar – so why aren’t the benefits being dispersed through a renewed solar rebate program?  In a public meeting on January 19th with DC Department of the Environment head Christophe Tulou, we were told that little or no long-term planning for DC solar rebates was being done because DDOE was awaiting approval of a contract with the new “Sustainable Energy Utility” – an organization that was being created to chart the path forward on sustainability in DC.  We were told that the SEU would fully engage on solar once they were formed.   Earlier this Spring, the contract for the SEU was awarded to Vermont Eneregy Investment Corporation.  We were very excited to sit down with the new Director, Scott Johnstone, and engage on a long-term vision for solar in DC.
Despite Mr. Johnstone’s firm grasp of renewable energy issues, we were disappointed to find out from him that; a) DC Department of the Environment was still in fact calling the shots on the long-term prospects for solar in DC; and that b) the SEU would be focus its 2012 spending to exclusively promote weatherization rather than carving out some funding for solar.  Our clear message to Mr. Johnstone was that the SEU needed to get out of the box fast on solar, and could jump-start the industry again about targeting some funds into the depleted solar rebate program.  Unfortunately, we were told that any such decision to replenish funds in the solar program would need to go through DC Department of the Environment.  So, back we went to DDOE asking about their plans to replenish funding in the rebate program from money that exists now and could be immediately available to those sitting on the waiting list.
This is where the bureaucratic maze really becomes difficult to navigate, as it appears that DDOE and the Mayor’s office are working on several very large “vision-setting” documents, of which solar is a small part.  Rather than trying to get some short-term wins by funding popular and highly effective carbon cutting solar projects, progress forward appears completely stalled as the “grander scheme” is developed on a myriad of sustainability projects.  What this means is the funding available for the SEU to spend on sustainability projects (like solar) may revert back to the general fund because no one will make the decision to fund the solar waiting list.  Funding the solar waiting list with 2011 SEU money would mean that solar projects could start right way, and the $2 million that will become available next year under the original rebate program could be used for new applicants to the waiting list.  Instead, it looks like inaction by the Mayor, DDOE, and SEU will allow the SEU funds to lapse back to the general fund – essentially heading off the possibility of getting more rebates to more people.
DC SUN continues to fight for solar incentives, but until there is a real commitment by our elected leaders, the program will continue to operate under a cloud of uncertainty.  This is unfortunate given that there is a clear path forward that will bring green jobs, carbon reductions, and locally-produced energy to meet peak summer demand.  What is lacking is a decision-maker willing to make this happen.  On July 11th, the SEU has announced a public meeting at 3pm at 1325 G St NW, Suite 500.  We think it is great that the SEU is reaching out the public, but it is about time that DDOE and SEU were in the same room offering a vision for the program rather than pointing back at each other when flaws in the existing program are pointed out.
If you want to go solar, please consider attending and using some of our key messages:
1)      DDOE needs to immediately announce what the planned rebate level is for next year, and re-open the waiting list for rebates.
2)      that DC needs measurable goals for attaining solar milestones (residential, schools, businesses, gov’t),
3)      that existing 2011 SEU funding should be used to fund the waiting list now to re-energize the program,
4)      that 2012 rebate funding should be supplemented by SEU funding to provide more rebates (smaller rebates can fund more projects)
5)      that a new 4-year plan (2013-2016) must be developed now to provide certainty for homeowners and industry and ensure that pepco surcharges are used for intended purposes, and
6)      that more creative ways to fund projects for low income residents must be developed to supplement existing rebate programs.
We are not quite at the point that explosive growth in installations will occur without a DC rebate program; however, with dropping prices and technology innovations, after another 4-year rebate program, it is likely that solar prices will drop to the point where rebate incentives may no longer be needed.  When the rebate program was up and running, it was extremely successful, so why not continue it as a way to move the city toward a renewable energy future. Solar is the gateway for DC residents from every ward in the city to dramatically reduce their carbon, and for people to take control of their energy costs to become more prosperous and self sufficient.  Solar has the potential to bring great green jobs to this city, instead of exporting our energy dollars out of our economy.  It is time for bold, clear and decisive action, not more delay and finger pointing.  City officials need to re-open and properly fund DC’s Solar Rebate Program!
Mike Barrette
Capitol Hill Energy Cooperative Solar Project Director
Founding Member of DC Solar United Neighborhoods (DC SUN)
Join our listserve at www.dcsun.org to learn more about going solar
Follow our blog and post comments at http://solardc.blogspot.com/
Let the following DC officials know that you want the DC Solar Rebate to re-open!