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Solar Eclipse : The home solar water-heating industry has been struggling since tax credits expired in 1985. Nowadays, concern for environment motivates solar users.

September 26, 1993|KIRSTEN LAGATREE | SPECIAL TO THE TIMES; Lagatree is a Long Beach free - lance writer

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.

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