09/13/10

  02:06:36 pm, by Jim Jenal - Founder & CEO   , 264 words  
Categories: Solar Economics, GWP Rebates, GWP

Glendale Solar Program Update - Commercial Rebates Suspended for Five Years!

We posted the other day about the sudden suspension of residential solar rebates at GWP, effective July 27, 2010. Today we can report that the suspension goes much farther. According to Ani Zargaryan, Solar Solutions Program coordinator at GWP, rebates for commercial solar power projects are suspended for five years! Ms. Zargaryan confirmed that there were no press reports about this drastic change in GWP’s solar program and there was no advance notice provided. Instead, an email was sent to solar contractors who had pending applications on file with GWP on August 5, after the cutoff had already been established.

Apparently, GWP looked at their budget, and the number of applications in hand and said, “Oops, we’re out of money!” With all due respect to the good folks at GWP, how can that possibly happen with no advance notice?  GWP had previously published on their website their anticipated rebate amounts through 2012 and they were some of the highest in the State. Unlike most other utility rebate programs where incentive payments are stepped-down based on actual amounts installed (thereby allowing for reasonable planning predictions - if more gets installed faster, the rebate simply steps down sooner), the GWP program structure either had to count on low demand or an unlimited pot of money.  Turns out, neither was the case.

Lack of predictability is a terrible thing in any marketplace and GWP’s abrupt suspension of its program is leaving customers - and installers - in the lurch. Odd that absolutely no one other than this blog is writing about this. As always, we will update this story if we learn anything more.

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09/12/10

  08:13:00 am, by Jim Jenal - Founder & CEO   , 151 words  
Categories: Solar Economics, GWP Rebates, GWP

What is Up in Glendale? Solar Rebate Program SUSPENDED!

Every quarter we update our published information about solar power rebates in our service area. Much to our dismay, we came across the news that Glendale Water and Power has apparently suspended their solar rebate program until July 1, 2011! We have scoured the GWP website for additional information but found none.  However, placing a call to the solar coordinator’s office provided this additional information:

Unfortunately we are unable to offer you the solar rebate at this time due to program incentive limitations. Solar Solutions applications received before July 27, 2010 will be processed - all applications received after this date will be added to our waiting list. Incentives will be available July 1, 2011. Please be aware that 2011 funding will also be limited.

We do not know what has caused the change, but we will report back when we have learned more. We would welcome comments from anyone at GWP who would care to clarify the situation.

08/25/10

  08:41:15 am, by Jim Jenal - Founder & CEO   , 1175 words  
Categories: Solar Economics, AB 811/PACE/LACEP Funding

PACE/LACEP Update - Injured, but Not Dead

Last week we wrote about the apparent moribund status of PACE financing programs - such as the LA County Energy Program - given the push back from Fannie Mae and Freddie Mac. The agencies’ concern is that a PACE program institutes a lien against the mortgaged property that takes priority over the mortgage itself and that violates the terms of mortgages backed by Fannie or Freddie. On August 24 we spoke with Lauren Rank of the LA County office of Sustainability about the County’s response to these developments. (Many thanks to Ms. Rank for taking the time to speak with us.)

LA County’s Response

Ms. Rank reported that indeed the LACEP program is presently on hold. However, there is much activity underway in an attempt to both revitalize PACE and find alternative means of financing renewable energy and energy efficiency projects in LA County. At the direction of the Board of Supervisors, on July 22, 2010 the Chief Executive Officer issued a Report to the Board (attached) with initial recommendations on how to deal with the present situation.  Some highlights from that Report are the following:

  • Legislative attempts to “fix” PACE  are underway in Washington, D.C. (more below).
  • The National Association of Counties adopted a resolution urging Congress to fix PACE.
  • The County is exploring Alternative Financing mechanisms including:
    • An FHA Title I loan program directed at renewable & energy efficiency projects. The loans could be either secured or unsecured with “some degree of federal subsidy.”  The anticipated interest rate (based on the current market) is 6-7%. HUD indicates that loans could be available in 3-6 months. If that is true, for qualifying home owners, this might be an attractive option. However, as of now we know nothing about the qualifying criteria that will be required.
    • California Energy Commission Grant Reallocation - the CEC had previously allocated some $35 million in State Energy Program grants for various PACE programs (not including LA County) but those grants are now on hold. The CEC is considering reallocating those funds to PACE jurisdictions “where they may make the most impact.” This reallocation might assist LACEP.
    • PACE with Subordinate Liens - since the sticking point is on the priority of PACE liens versus the existing mortgage, one possible solution is to issue PACE loans that are subordinate to the mortgage. That solves the Fannie/Freddie issue, but jeopardizes the ability to sell the municipal bonds needed to fund the program. The County Treasurer & Tax Collector’s office is warning that this is not a viable option.
    • Statewide Whole House Retrofit Program - the State of California has set aside $140 million for the Investor Owned Utilities to implement more comprehensive, whole-house retrofits instead of simply providing rebates on individual appliances. Unfortunately, it does not appear that any of this money could be spent on financing solar installations.
    • PACE funding on non-FNMA/FMAC loans - some loans are not subject to restrictions from Fannie and Freddie and in theory these loans could move ahead with PACE funding. However, since some of those loans could subsequently be sold to Fannie or Freddie, this is not considered a particularly viable approach.

While there is clearly a great deal of effort being expended, for the near term the only option that appears to have potential to assist homeowners in adding solar is the FHA Title I loan program. As we learn more details about that program we will report on them here.

Legislative Response

The clearest path to a resolution is legislation from Congress. In the House, both Henry Waxman (D-CA) and Barney Frank (D-MA) have indicated their support for PACE protection and action by their committees is to be expected after the recess.

The bill in the House, HR 5766 by Rep. Michael Thompson (D-CA), has some 48 cosponsors (47 Democrats and 1 Republican) as of today, while the corresponding legislation in the Senate, S 3642 by Senator Barbara Boxer (D-CA) has five cosponsors (all Democrats). As there is nothing partisan about helping homeowners make their homes more energy efficient and installing renewable energy systems, those cosponsor numbers will surely increase once Congress returns from its August recess. (Of course, it would not hurt for those reading this post to contact their members of Congress and urge them to support the legislation.) The widget in the box above will update with the current status of the bill, or you can click on the “View” link to see the updated status. (Thanks to the govtrack.us website which provided the code.)

The text of both measures is identical and very short. In its entirety, here is the text of the legislation as it exists today:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘The PACE Assessment Protection Act of 2010′.

SEC. 2. TREATMENT OF PACE PROGRAMS BY FANNIE MAE AND FREDDIE MAC.

(a) Adoption of Underwriting Standards- Not later than the expiration of the 60-day period that begins upon the date of the enactment of this Act, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation shall adopt underwriting standards that are consistent with the Guidelines for Pilot PACE Financing Programs issued on May 7, 2010, by the Department of Energy. Liens or other property obligations that secure property taxes or assessments under a PACE program and are consistent with such standards shall be considered to comply with the Uniform Instruments of such Association and Corporation and shall not constitute a default on an existing mortgage or trigger the exercise of lender’s remedies for a property with such a lien. With respect to a property that meets the underwriting criteria of the Association and the Corporation without consideration of the PACE program lien, the Association and the Corporation shall not require repayment of a PACE program tax or assessment in order for a property owner to finance, refinance or transfer the property. The underwriting standards shall provide that, in the event that a tax or assessment under a PACE program is delinquent, only the unpaid delinquent amount along with applicable penalties, interest and costs will be subject to foreclosure and not the entire amount.

(b) Prohibition of Discrimination- The Federal Housing Finance Agency, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation, and all Federal agencies and all entities chartered under Federal law shall not discriminate against communities implementing or participating in a PACE program, including by prohibiting lending within the community or requiring more restrictive underwriting criteria for properties within the community.

© Definition of PACE Program- For purposes of this section, the term ‘PACE program’ means a property assessed clean energy program under which a State or political subdivision of a State levies taxes or assessments on residential, commercial, agricultural, and other real property to finance the installation of renewable energy and energy efficiency improvements.

08/19/10

  11:03:31 am, by Jim Jenal - Founder & CEO   , 493 words  
Categories: Solar News, AB 811/PACE/LACEP Funding

Is PACE Dead, and with it the LACEP?

We have been writing about the financing method known as PACE - for Property-Assessed Clean Energy- for many months.  (You can find all of our posts here.) Made available statewide through AB 811, PACE financing allows for solar projects (and other energy efficiency measures) to be funded by an assessment on the property that is paid as part of the property tax bill over twenty years.  The funding comes by way of the sale of municipal bonds and there is no burden on local government budgets to support the program. This allows homeowners to make their homes more efficient (thereby lowering their utility bills) with little or no up-front cash and at the same time helps to create good-paying jobs in the local community.  The County of Los Angeles approved its own PACE program (LACEP) in May and the first loans were set to be funded sometime this Fall. PACE financing was viewed as such a win-win it is no wonder that communities all across the country were scrambling to join in.

Not so fast. Mortgage companies, led by Fannie Mae and Freddie Mac, have cried foul. Since the programs operate as a property assessment, they have priority over the existing mortgage in the event of a default and subsequent foreclosure. Using such a program could put a homeowner at odds with the terms of their existing mortgage and might, all by itself, result in a technical breach of the mortgage contract. Faced with such resistance, PACE programs have come to a grinding halt. A story in the August 19, 2010 LA Times reflects the chorus of bad news that has been trickling out now for many weeks. Does this mean that PACE financing is dead?

Perhaps - but is the position of the mortgage industry reasonable? After all, the LA County program had some pretty stiff requirements for participation that were designed precisely to prevent foreclosures. In particular, the LACEP required that the debt to value ratio for the home could not exceed 80% and that the loan to value ratio could not exceed 10%. Assuming that those valuations were for recent market conditions, they are very conservative requirements. In addition, the homeowner needed to be current on both the mortgage and prior property taxes. Since the LACEP would have allowed the homeowner to substantially reduce their energy bills with either zero or little up-front cost, it is hard to see how participating could have pushed the homeowner closer to default, but if default had occurred, the mortgage holder would have still been protected. Indeed, by putting more money into the homeowner’s hands, it would seem that the risk of default would have been substantially lessened.

While legislative fixes are potentially in the works, in the meantime many projects are now on hold and with them, the jobs that are so badly needed during this difficult economy. Here’s hoping that the Obama administration can talk some sense into the mortgage industry and get these programs back on track.

 

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08/12/10

  06:04:00 pm, by Jim Jenal - Founder & CEO   , 458 words  
Categories: All About Solar Power, Solar Economics

Installer's Dilemma - Solar Power Systems as a Commodity or Hi-Quality Item?

A recent survey looked into the question of whether solar power systems are now being viewed as a commodity item - that is, pretty much one system/component/installer is as good as another so the only point of differentiation is cost - with the lowest cost being the winner.  The evidence from the survey was pretty mixed with a slight leaning amongst all respondents toward solar being a commodity, while the installers who responded felt that there were other, more important points of distinction.  Of course, that might just mean that the installer community is fooling itself, that solar is a commodity and customers really do not care about anything other than price.

The Run on Sun philosophy is a bit more complicated and considerably less cynical.  We are committed to providing the best-performing solar power systems on the market.  That is reflected in our preference for Sanyo solar panels for residential systems and our adoption of Enphase micro-inverters to overcome shading issues.  We are also committed to having the most professional installers in the industry - and that is reflected by our pursuing and achieving NABCEP Certification for all three principals of the company.  Taken together, we are designing and installing systems that produce more energy than their rebated rating would predict.  We are proud of these systems and we are equally proud of the great comments we get from our customers.

And yet, it is hard to get past the notion that we might not be connecting with the broader customer base that wants to add solar, but is daunted by the price. To serve that customer group we need to provide a system design that maintains our exacting standards yet can be priced at a more attractive level. That is a real challenge, but we are now in a position to make such an offering using the new Conergy P-series solar panels. Conergy is the world’s largest distributor of solar power products - and these new panels are built to Conergy’s demanding specifications in China, providing substantially lower cost without sacrificing quality.

The addition of these panels to the Run on Sun line of products will allow us to offer lower-cost systems where space and shading constraints permit. Combined with our long-standing reliance on SMA inverters, these new panels will allow us to provide high quality but much lower priced systems that will help make solar more affordable than ever before.  For those settings where space or shading requires a more sophisticated approach, we will still be offering our top-of-the-line Sanyo/Enphase systems that allow homeowners to wring every Watt available from their location.

We are very excited about these new panels and we hope that they will help even more folks add solar so that they too can Run on Sun.

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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