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For years, CPS Energy has helped support San Antonio’s rooftop solar industry with generous rebates.
Those rebates ended in 2022, but local installers say that’s not necessarily why they’re seeing a slowdown in residential projects.
Kyle Frazier, head of commercial sales for Freedom Solar Power, which began in Central Texas in 2007, said rising interest rates have depressed residential rooftop sales after several years of gangbuster activity.
Most homeowners seek loans for their solar projects, and so with low-interest rates and high liquidity thanks to pandemic-era stimulus, loan payments were equal to or even less than the savings they realized on their energy bills from installing a solar rooftop.
“That’s really difficult to do now,” Frazier said. Beyond higher interest rates, however, he thinks potential customers are feeling less secure about the state of the economy.
“At the end of the day, solar is a lot like buying a hot tub,” Frazier said. “You don’t need to do it, and you’re never going to do it in a moment of uncertainty.”
Yet while Freedom and other solar installers say residential rooftop installations are slowing, commercial installations remain strong, thanks in large part to the Inflation Reduction Act passed by Congress in 2022.
For one, companies can get a 30% tax credit on what they spend on commercial projects; it was 26% in 2022, but was set to expire in 2024. The Inflation Reduction Act also includes add-ons that can raise the value of the tax credit even further, including for systems in low-income communities as well as communities hurt by closing fossil fuel plants.
Each of those are worth another 10% tax credit, as is a provision for panels made domestically. Right now there are no panels that fit that definition, Frazier said, although he predicts there will be.
That includes panels made in San Antonio by Mission Solar Energy, which launched a decade ago, making it the first solar panel manufacturer in Texas. But because the panels’ solar cells are imported from Southeast Asia, they’re not eligible for credit.
Two other big changes to the tax credit are helping fuel strong growth: companies that want to avoid the paperwork associated with the tax credits can now sell them, and for the first time, tax-exempt organizations like nonprofits, schools and governments can take advantage. of the credits.
The IRS just issued proposed rules for how those entities can take advantage of what will essentially be direct payments for a percentage of the cost of a clean energy project like a solar rooftop.
San Antonio ranks as one of the top cities in the country for solar power, in large part thanks to CPS Energy’s investments, both buying power from utility-scale systems and by offering generous rebates on rooftop systems. The city-owned utility has spent more than $166 million since 2007, subsidizing the installation of more than 27,000 systems for residential and commercial customers.
Most recently, the utility was paying a maximum of $2,500 per residential system, and it still offers a rebate for commercial systems, including for schools and nonprofits.
When CPS Energy’s rebates were highest, it was a little like the Wild West for installers, said Shelbi Jary, senior commercial sales consultant for IES Texas Solar. Jary has been working in the industry for the past 13 years.
“Especially in the beginning, because CPS Energy really supported the industry, people came here in herds to open up” rooftop solar companies, she said.
That herd has thinned considerably, said Don Dickey, CEO of Advanced Solar, which was one of the first certified installers in San Antonio. “We’ve seen close to 300 companies come and go in the 13 years we’ve been in business,” he said. It’s always a bit of a revolving door.
That means potential customers need to do their research before signing up with a solar company, said Ben Rodriguez, executive director of the San Antonio Solar Alliance, which represents installers and helped push CPS Energy to extend its rebate program beyond 2015.
He and others suggested looking at a solar company’s longevity when deciding whether to sign on the dotted line, and asking whether the company does its own installation.
Third-party installers were not eligible to get on the certified CPS Energy list as part of its rebate program, he said, because they don’t maintain their own offices and employees.
Build San Antonio Green’s Bring Solar Home program, which bills itself as “a free, unbiased, technical consumer decision tool” can help those interested in a solar rooftop understand what kinds of questions to ask installers.
That should include the price per watt in addition to the overall cost of a system, Dickey said. He said these days a typical system should cost around $3.50 a watt, but that with hidden fees, the cost can be as high as $5 or $6 a watt.
“There’s a lot of misinformation out there,” he said. So it’s really important to get direct answers to your questions.
Science and Utilities Reporter Lindsey Carnett contributed to this report.
CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.
