Solar Eclipse : The home solar water-heating industry has been struggling since tax credits expired in 1985. Nowadays, concern for environment motivates solar users.
Frank Wells bought his dream house as a fixer-upper last year. The spacious Long Beach home came with a swimming pool, an elite address and something of a historical artifact--solar panels on the roof.
The water-heating panels look strange and date back to a heyday the industry would rather forget. “They’re like these science fiction things sticking out of the top of the house,” he said. “They’re really kind of an eyesore.” But the real problem, Wells said, is that they leak. He decided it’s cheaper to remove them than repair them.
The residential solar water-heating industry has struggled for the past eight years to regain its place in the sun, lost after generous tax credits expired in 1985. The industry is also trying to recover from the black eye it got during a virtual stampede for solar water-heating systems.
Between 1978 and 1985, solar panels sprouted on thousands of California rooftops as homeowners raced to take advantage of hefty state and federal income tax credits. The credits were designed to encourage use of the energy-efficient and environmentally friendly technology--and they did. But those boom years were a mixed blessing.
“It was an exciting time,” said Les Nelson, president of the California Solar Energy Industries Assn. (CAL-SEIA), “but it was also the trashing of an industry.”
Susanne Garfield of the California Energy Commission agreed. “Everybody who had a garage was beginning to manufacture hot water systems for your house,” she said. “So the reputable companies got lost in the shuffle with the non-reputable.”
Many solar manufacturers at that time marketed their products based on the tax rebates. And the rebates were considerable. The federal tax credit was 40%, the state was 30%. That meant that if a homeowner paid $10,000 for a solar hot water system, he deducted $4,000 from his federal taxes and $3,000 from state taxes. The net effect was an attractive rebate on the purchase prices.
But it also meant that some manufacturers took advantage of the system. “We saw the prices double to triple from manufacturers,” Garfield said. Before the tax rebates, systems were selling for about $2,500. During the tax-credit stampede, some manufacturers with high-pressure sales teams routinely charged $10,000 a unit.
Added CAL-SEIA’s Nelson: “The systems were sold with impossible promises about what they could do, and when the tax credits expired, so did the vast majority of the companies.”
Solar-Tronics in Chatsworth is one company that has stood the test of time. Owner Bruce Brende has been installing and servicing solar water-heating systems for the past 17 years. “Most of the people who gave out 10-year warranties with those promises are out of business,” he said.
Brende estimates that of the about 250 companies nationwide that manufactured solar water-heating systems during the boom years, 10 remain.
Rene and Robert Garrick of West Hills got their solar unit in the boom years, but they are satisfied customers. The Garricks had their first system installed about 12 years ago when they lived in Canoga Park.
“We were believers in solar,” said Rene. “And when they had tax credits, there was a real incentive to do it.” But even after the tax credits had expired, the Garricks elected to add a solar system to their new home, absorbing the approximately $2,500 cost. “We’re very environmentally conscious,” Garrick said, adding with a laugh, “we’ve been recycling glass and newspapers for 15 years--before they paid you to do it!”
Nowadays, concern for the environment is the chief motive for most who install solar water-heating systems. But for those who live in very large households, or all-electric homes, economics still come into play.
Jim Durrenberger of Goleta got the tax credit in 1982, when he converted to solar power for water heating. But he says it would have made sense even without the rebate. “We have an all-electric house, and heating water was very expensive for us,” he said. “I kept close records and found the system paid for itself in about a year and a half.”
Cheri Hernandez and her husband, Fred Reed, of Seal Beach accidentally discovered the economic benefits of solar water heating. The panels were already on the house they moved into in 1987.
“I thought they were great,” she said. “We had four kids taking showers, and we always had hot water. It saved us on our gas bill too.” Hernandez said that with the solar panels her gas bill was half what it had been in the much smaller house they had moved from.
But Hernandez is also an example of what has befallen the solar water heating industry. She and her husband are building a new home--but they’re not spending the $3,500 it would cost to include solar panels. “It just wasn’t in the budget,” said Hernandez.
CAL-SEIA’s Nelson is used to this. “If there were just some encouragement to use the technology by making known the environmental or cost savings, there’d be a much bigger market than there is today.” As it is, natural gas is relatively cheap, and without financial incentives, the expense of adding solar systems doesn’t pencil out for the individual homeowner.
However, the expense can pencil out for developers in certain cities. A handful of Southern California communities include solar among the amenities they encourage builders to provide. Developers jockeying for permits to put up a tract in Placentia, Camarillo or Thousand Oaks can get “points” if their plan includes solar along with other preferred features such as low density and parkland.
Most of the new residential solar systems are built through such incentive programs.
The solar industry is also feeling the competition from natural gas. According to Nelson, the struggle between gas and solar is, well, heated. “There’s little love lost,” Nelson said. “It’s either them or us.”
The South Coast Air Quality Management District is stepping carefully through the controversy. “It’s unfortunate that the choice has to be between two such clean fuels,” said Ranji George, program supervisor of alternate energy projects for the SCAQMD.
“The AQMD staff is wildly enthusiastic about solar water heaters,” George said. “But, of course, the gas company feels they can produce a competitive technology.”
George says that although solar is preferable because it has zero emissions and is renewable, the AQMD still considers natural gas to be a relatively clean alternative.
AQMD spokesman Bill Kelly adds that the agency considered a set of rules that would have required solar heating for homes and pools but decided to use a carrot, rather than a stick approach. A market incentives program to encourage various types of low-pollution systems is scheduled for adoption this October. The portion of the plan that would provide incentives for domestic water heating systems isn’t expected for another year or so.
No incentive programs are needed, however, to encourage the use of solar for pool heating. CAL-SEIA’s Nelson says it is the largest segment of the industry, about 60% of the marketplace.
“You can spend (as much as) $500 a month to heat a residential pool,” said Nelson. “What usually happens is people turn on the heater, run it for maybe two months until they get the bill, have a heart attack and don’t use it anymore except for July and August, when it’s hot anyway.”
Something like that happened to Marion Magee of Fullerton. “We had solar put in the year I left the heater on for one month in the spring. The bill was $500, and I immediately called up and got a solar heater. It works great, it was like a bathtub last summer.”
Aside from the initial cost of installation (which Nelson estimates between $3,000 to $5,000), heating the back yard pool is essentially cost-free. But solar pool heating does require a lot of space.
To heat a pool, the solar collecting panels must equal 70% of the pool’s surface area. For instance, a 15-by-40 foot pool--450 square feet--will need more than 300 square feet of solar panels. They can be mounted on garages, carports or trellises. One enterprising solar installer has even come up with a design that puts the panels under the pool deck--or for some of his high-roller clients--places them under the tennis court.
Modern innovations notwithstanding, capturing the sun’s rays to heat household water is far from new. Solar hot water heating systems were introduced in California around the turn of the century.
Dubbed “Climaxes” by their manufacturer, the units enjoyed wide popularity--in 1907 nearly one-third of all Pasadena homes were equipped with the systems.
In those days water was still brought in from the pump outside and heated on the stove. That made the solar units the last word in convenience. Water was pumped through the units on the roof and arrived in the house with little exertion from Pasadena housewives.
At their peak, Climaxes could be found in about 10,000 California households. But the enthusiasm for solar heating cooled around 1915 with the discovery of oil and natural gas deposits in the state.
The new fuels were cheap and became trendy. As the price of natural gas dropped from 23 cents a therm in 1921 to 8 cents a therm just after World War II, the new fuels steadily eclipsed solar.
These days, California has about half a million solar water heating systems, for both residential and commercial use. According to the state Energy Commission’s Garfield, that number goes up by about 10,000 a year, most of it for commercial users of hot water, such as Laundromats.
Garfield is optimistic about the future of solar power for a variety of uses. “Solar has gone from hippie types to high-tech commercial use. It’s used in power generation and has made the transition to leading edge technology. But it all started with hot water.”