California is Working to Keep Solar Water Heating Hot

Tensions Rise over the Uncertain Future of AB 797  

California multi-family housing buildings currently use rebates to install solar water heating systems on their roofs, reducing their natural gas use and helping clean our air.  But a critical program that helps them install solar water heating systems on their properties will soon end unless the California legislature takes action next week.

In a push to continue California’s fight towards cleaner air, state Assemblymembers are now considering legislation that could ‘make or break’ the entire solar thermal industry and greatly impact affordable housing developments.  Assemblymember Jacqui Irwin (D-Thousand Oaks) is leading a bill this year, AB 797, to extend and replenish the state’s critical rebate program for solar water heating (sometimes called ‘solar thermal’).  Stepping up to help are California environmental and affordable housing organizations, solar businesses, and even the state’s major natural gas company, who are actively calling and writing letters supporting the bill for an important hearing next week.

Since 2010, the California Solar Initiative– Thermal program has been issuing rebates for solar hot water systems on multi-family residential properties, including affordable housing properties. Given the current low cost of natural gas, this program is essential for installing solar water heating in these communities.  Low-income residents spend proportionately more of their income on energy, meaning the rebates will go further to help those households.  Initially $25 million in rebates was directed towards low-income installations, with an additional $25 million recently added to help meet demand for this important community.

However, the program is set to expire at the end of this year. Not only will this have a heavy impact on nonprofits’ abilities to afford the systems, it could also greatly impact the solar thermal industry.

To compete with cheap natural gas prices, California’s solar thermal businesses rely on these incentives to help hit an attractive price point for homes and businesses to install solar thermal technologies. After years of low use of this program due to low rebate levels that were set when the price of natural gas was much higher, things turned around in 2015 when effective rebate levels were put in place.  Recently there has been strong growth in projects completed and therms of energy saved.

According to Dr. Kelly Knutsen, Senior Policy Advisor for California Solar Energy Industries Association (CALSEIA), “Program activity has increased, with some of the greatest growth within the multifamily housing sector – 18% annual growth from 2014 to 2015, and 32% growth between 2015 and 2016.” This recent activity is expected to continue with the extension of the incentive program.

CALSEIA is a major proponent behind the support for AB 797 and has worked closely with the CSI-Thermal program to make it work for everyone even before the proposal of the bill. The organization petitioned the California Public Utilities Commission in 2012 for increased incentive levels, and again in 2014, and the petition was approved in full. With these changes taking effect in 2015, program activity saw aggressive growth. This organization has worked with companies all over California garnering support for the legislation, even natural gas providers. SoCalGas, the primary provider of natural gas in Southern California, has written a letter of support for the bill.

Now that the program is well-established with positive annual growth, a 5 year extension of this program is essential for low-income communities, the solar thermal industry and the local jobs and economic development it supports, and the environment.

Solar thermal companies, like Adroit Energy, Inc., will feel the burn if this bill does not pass. Adroit Energy’s COO, William Chen, states AB 797 must pass to convince the market to trust and accept the solar water heating technology. “First, it helps owners’ buying confidence when the state officially recognizes the technology with a rebate. Second, the strict CSI-Thermal program ensures that the technology is implemented correctly and installations perform well over their expected 25 year lifetime. Third, through the CSI-Thermal program, we can continue to educate building owners about making the right choice on choosing this most-efficient method of water heating.” In California, there are over a hundred solar thermal companies that would no longer be supported by these essential rebates if the CSI Thermal program does not continue.

The future of this bill is uncertain. There has been massive support for AB 797 around the state in diverse sources, from low-income communities to large natural gas providers. The Assembly Committee on Utilities and Energy meets on April 19 to decide whether to keep AB 797 and this important program alive.  If the bill is reported out favorably, the push for the “Aye” votes will not end until the bill passes both houses and is signed into law in the coming months.

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