In June 1979, President Carter announced with fanfare at a rooftop press conference the installation of a solar hot water heating system that was expected to save $1,000 a year on the White House heating bill together with creation of a $100 million solar energy bank designed to help the country get 20 percent of its energy from the sun and other renewable sources by the year 2000.
One administration and nearly two years later, the West Wing's solar water heating system still is functioning as planned, according to the White House press office.
The bank is another story. The Solar Energy and Energy Conservation Bank, authorized by Congress as a part of the synthetic fuels bills, has fallen victim to budget cuts. The Office of Management and Budget has proposed eliminating appropriations of $121 million for 1981 and $125 million for 1982. Outlays would be reduced by $100 million in fiscal 1982. Administration spokesman contend that existing federal credits and rising oil prices provide enough incentives for investment in solar energy and conservation.
The bank would have been operated by the Department of Housing and Urban Development. It was supposed to make low-interest loans to single- and multi-family homeowners and commercial apartment owners to install solar systems. The law provided strict income limitations as well as maximum amounts per dwelling.
For example, for individuals with incomes below 80 percent of the area median, the bank would have financed 60 percent of the cost of the system; for those with incomes 60 percent of the area median, it would have supplied only 40 percent. The maximum lendable amount on a single-family house would have been $5,000; for a commercial building, much more. The Carter administration estimated 100,000 houses could be equipped through the bank.
The bank would have financed so-called passive solar systems almost exclusively because the 40 percent federal tax credit (plus other state and local credits) for active solar systems offers the owner better terms than the subsidized loan. (There is no tax credit for passive systems.)
An active system is one that uses moving parts, the most common of which are flat plate collectors, often placed on the roof, which are most frequently used to heat water inside or in outdoor pools and less frequently used to heat homes. A passive system uses no moving parts or special solar equipment; instead, architectural design to take advantage of such things as the angle of the sun is used to make a house energy-efficient, according to the Solar Energy Industries Association.
Six months ago the Department of Energy estimated that there were between 5,000 and 10,000 houses built on passive systems. It put the number of houses with active systems to heat water, space and swimming pools at 150,000.
William S. Bergman, executive vice president of the industry assocation, puts the number of active systems at double that figure and says 250,000 to 300,000 more have been ordered, half of them by Californians. Passive systems now are installed in two out of seven new homes, a ratio Bergman called poor.
Although Bergman called the estimate of 100,000 houses to be financed by the bank wrong by a factor of 100, eliminating the bank would have a fatal effect on development of passive systems, he said. Builders would be dissuaded from putting in solar features, knowing that people would not want to pay extra for them without being able to get a subsidized loan. Bergman labeled cancellation of the project "very shortsighted of the administration."
However, the solar association's president, Paul Cronin, said the bank would have made "very little, if any, difference" to the solar industry. By the industry, he means the manufacturers and installers of active equipment. "Its [the bank's] passing won't be mourned," Cronin said, referring to the many restrictions built in. In fact, Cronin said it probably would have a positive effect.
He said that solar sales have been at a dead stop since the government began planning to subsidize solar energy because people waited to order equipment in the hope of getting a loan. Now that the issue of government subsidy is dead, Cronin believes progress once again will be made.
But besides elimination of the bank, there also is a 60 percent cut in DOE funds for solar and alternative sources of fuel. Tom Miller, of Solar Science Industries Inc. in Beltsville, offered a more pessimistic outlook. "Consumers will have a more difficult time finding financing for solar systems," he said. "The chances of replacing 20 percent of our energy needs by the year 2000 [by renewable fuels] are quite slim now.
"Most of the companies in this industry are small. They come and go. The solar industry has gotten a black mark because of the number that have failed. Our security is now in jeopardy."
Miller predicted that in the future the established mechanical trades, like building contractors, would play a bigger role in the solar industry at the expense of entrepreneurial companies.