Solar Withdrawal Symptoms

Austin Energy's solar rebate program is out of money – are Austin's solar installers out of luck?

Karl Rábago, Austin Energy’s vice president of distributed energy services, had a dose of bad news for solar installers last week: a drastic cut in the utility’s solar-rebate program.
Karl Rábago, Austin Energy’s vice president of distributed energy services, had a dose of bad news for solar installers last week: a drastic cut in the utility’s solar-rebate program. (Photo by John Anderson)

When Austin Energy convened an emergency meeting last week with its solar-rebate program contractors, Brandon Mathis expected an announcement that the rebate – currently a generous $3.75 per watt, despite dramatic drops in solar prices – would be reduced. "Over time, any good rebate program is going to wean everybody off of it," says Mathis, whose company, Solar Community, is among the program's 24 approved installers. What he didn't expect, however, was to learn that he may be going cold turkey.

According to Karl Rábago, AE's vice president for distributed energy services, it was clear by early August that the rebate program would exhaust its entire $4 million budget for the 2009 fiscal year – and not long thereafter, it exhausted an extra $1 million in unspent energy-efficiency funds as well. Then, he says, as the fiscal year-end approached, applications poured in, gobbling up next year's budget. So on Sept. 17, AE announced a meeting to be held the next week. Over that week, says Rábago, AE received a million dollars' worth of applications; within the 24 hours before the meeting, it received yet another million dollars' worth. By the time Rábago spoke to the contractors, AE had already committed $3.3 million of FY 2010's $4 million budget – with another $4.5 million worth of applications still pending. "So essentially," says Rábago, "the purpose of the meeting was: We've got to figure out how to spend this last million."

Using ideas given at the meeting and in the days after, Rábago has proposed sweeping changes meant to stretch out the remaining funds, including reducing rebate and per-project expenditures, requiring energy-efficiency measures, and replacing the program for commercial, multifamily, and nonprofit customers with a new program, set to begin in January. All 135 pending applications, including about 110 residential ones, would be returned to applicants; residential customers would be able to reapply beginning Nov. 1, but they'd have to adhere to the new policy.

"I don't think anybody that's in it for the long term has an issue with a lower rebate," says Mathis. But the "retroactivity," he says, "is a big point of contention." While some applicants may swallow the price increase, many likely won't – a scary prospect for contractors who've sunk substantial time and resources into just getting clients to the rebate application stage. Clean energy advocacy nonprofit Solar Austin has released a statement noting that the "retroactive decision-making will have an extremely damaging impact on the industry because of the commitments they have made based on the existing ­program."

It's possible that AE can come up with more money, says Rábago – through energy-efficiency funds unspent by next September or through potential Depart­ment of Energy funding. But most 2010 applicants could be out of luck, which may not bode well for solar installers. "A lot of these companies won't be able to make it if they put this program on hiatus for a year," says Solar Austin's Cary Ferchill. "I can't deny the pressure and the pain that ... vulnerable businesses will face," says Rábago. "I can't sugarcoat it, and I can't think of a fair way to protect everybody from the consequences of the basic numbers."

Echoing other contractors' input, Mathis counters that AE should have mentioned funding issues at the monthly meetings with installers in August and early September, possibly sparing AE's most recently approved solar contractors from making hires and investments they might otherwise have avoided. At the meeting, Mathis says, he asked for a show of hands from installers who'd been approved for AE's rebate list within just the last three months. "Four different companies raised their hands," he said. "One of them was sitting right next to me, and this was his first meeting ever."

"That's one of the lessons we've learned from this," says Rábago. AE does provide publicly available status reports on the program to the Resource Management Com­mis­sion every month, but now, says Rábago, he plans to send those to the contractors as well. "To be honest, we should keep them up to date," he said. He admits that the unprecedented pace with which the program received applications caught his staff "unawares," but he says that the growing demand for solar does suggest a silver lining: "The big picture," he says, "is that already we have signs that meeting [City Council's] solar goal will be faster and cheaper than we thought." Plus, he adds, "Remember, we're committed to $3.3 million worth of work for this coming fiscal year already."

"There is solar outside of rebates," says Mathis, who says he's worried less about the outlook for his business, which is relatively well-established, than for the newer ones, but he laments AE's "lack of transparency" regarding the rebate program: "They've known about this, and they led these people on," he says. At press time, Mathis planned to join Solar Austin representatives at the council meeting Thursday (today) to suggest innovations in how AE can support local solar industry both with and without rebates.

Read Austin Energy's full rebate-program recommendations [PDF]

Read Solar Austin's statement [PDF]

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Austin Energy, Brandon Mathis, Solar Community, Karl Rábago, Solar Austin, solar rebate program

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