Over the last fifteen months, the VI Energy Office has rolled out and promoted a program to help Virgin Island residents purchase a solar hot water system for their home or business. The Sun Power Loan Program offers a 50% cash rebate and a 5-year loan at 1% on the balance of a solar hot water system purchase. The net effect being that when you unplug your old electric water heater you just saved all the money you’ll need to pay for your loan on a new solar hot water system. A sweet deal and also revenue neutral for participants.
Anticipating strong participation in the program, the VI Government invested in training 60 men and women on St. Croix and St. Thomas to install the 1,000 systems the Energy Office had set as a goal for the program; about 800 systems are now in place. The program utilized capital from the VI Government Development Bank for loans and federal stimulus funding for cash rebates. The stimulus funding will soon be exhausted and the question now is will this program have been just a flash in the pan or will it be the start of long lasting commitment by the VI Government and WAPA to complete the job by retrofitting the remaining 34,000 structures in the territory with solar hot water systems over the next 15-years? I think there is a strong economic case to be made for the latter.
Using a 15-year time frame, retaining the program’s 50% cash rebate, and raising the loan interest rate to 4% (to cover realistic administration costs) the program’s economic value to the territory will be significant and widespread. A commitment by WAPA and the VI Government to this level of annual funding would mean that approximately 2,400 solar hot water systems would be installed annually; roughly 3.5 times more systems installations per year than is currently being done. The funding needed for such an expanded program would be $9.4 million in year one and fall to $4.7 million in year five when new loans issued and loan payments coming in reach a steady state for the remaining 10-years of the program.
Installing this number of solar hot water systems annually will result in the following:
v The creation of 17 megawatts of renewable energy capacity with storage in the territory (equivalent to the electricity used by 7,650 homes). This allows WAPA to provide power to new customers without having to expand their physical plants (managing demand is always cheaper than building new generation capacity).
v Provide full-time employment for the 60 now part-time employed men and women that the VI Labor Department trained in solar hot water installation and increase their numbers (about 150 Green Technicians would be needed). Provide full-time employment for an additional 30 office, shipping, and warehouse workers
v Provide the volume of sales needed for local manufacturers and installation companies of solar hot water systems to thrive
Unlike solar electric or wind (no power at night or on windless days), solar hot water has built in storage capacity; each system stores enough hot water for 2 to 3 days of no sun. Over the 15-year life of the program the averaged cost of the 17 megawatts of renewable energy it will install is approximately $3.8 million/megawatt. By comparison, utility scale solar electric systems install for around $4.5 million per megawatt, large-scale wind farms come in at $2.1 million/megawatt, and the proposed Alpine waste-to-energy plant was originally scheduled to produce 37 megawatts of power at a cost of $440 million ($11 million/megawatt). Unlike solar hot water, utility-scale wind or solar electric systems do not store the power they make for use during sunless or windless periods. A continued investment by WAPA and the VI Government in an expanded solar hot water program will generate far more sustained employment and create more local businesses that any of the above mentioned energy technologies.
If WAPA and the VI Government choose to make this sustained and increased investment in the solar hot water program it will ensure that every resident and business in the Virgin Island will see their electric bills reduced, the territory will reduce its dependence on imported oil, we will expand its renewable energy workforce, and local energy companies will grow and expand. What legacy does this administration, the Legislature, and WAPA want to leave the next generation? Do they want to know as a “One-Year-Wonder” or do they want their legacy to be that they met the challenge head-on and provided the investment capital needed to ensure a secure energy future for the territory.
Kelly Gloger
