Monday, March 2, 2015

March 1, 2015


The economics of solar water heating just got a huge shot in the arm!  While the payback for apartment systems was already a reasonable 3 to 6 years, rebate reservations were not moving fast enough for the California Energy Commission.  Therefore, they increased the rebate by 39% (29% for low income housing), effectively lowering the complete payback to only 2 to 5 years.

With the 30% Federal Tax Credit and 5 year accelerated depreciation considered, many owners get back 70 to 90% of a system’s cost in the first year.  If you want to replace and update your old solar hot water system from the 80’s, you get the same rebate resulting in a 1 to 2 year payback.  Want to heat an apartment swimming pool?  The Gas Company will also pay around half the cost of that installation.

If you have no “tax appetite” (non-profit of low-profit entity), there are several PPAs that will install the system for you at no cost and sell you hot water at a deep discount…no strings attached.  All maintenance and monitoring are included, and in 15 to 20 years you can buy the system from them if you want…cheap. 

Of course, this means that reservations will accelerate rapidly as word of this deal gets spread…and the rebate will decrease as certain “Steps” in rebate allotments are reached.  Each utility territory has its own pool of rebate funds, and some have already reduced to the Step 2 level.  The Gas Company, however, is still in Step 1, so rebates are still at their highest here.  Even new construction qualifies.  The building must have gas service from The Gas Company, which means Long Beach or Vernon customers cannot apply for these rebates. 

While gas bills are perhaps not the biggest concerns of an apartment owner, rates have been increasing over 10% per year for the last two years, with similar announced for this year as well.  This is an excellent opportunity to reduce your cost of operation, increase profitability and resale value, and hedge against inflation.