Solar Energy Blog, Vibrant Solar, Inc.

Denver, CO, September 30, 2008…During the three years since Colorado’s Amendment 37 passed, mandating power company rebates on solar electric systems, the local solar industry has taken off.  There are now over 150 companies installing systems in Colorado– most very small operations.  A couple of locally owned companies have become major players, while some national companies have moved into this ripe market.

One of the leading local companies is Vibrant Solar, Inc.  Vibrant Solar started business in the second quarter 2006, and had two employees and some contractors at end of that year.  Today they have 38 employees, numerous contractors, a statewide operation, strategic partnerships, annual sales approaching $6 million, and plans to double revenue again next year.  

Mark Simmons, Marketing and Sales Director for Vibrant Solar, said that the primary reason for such growth is Xcel Energy.  “Xcel launched and built one of the best rebate programs in the country,” explained Simmons.  Xcel’s Solar Rewards program is available to their 1.3 million Colorado electricity customers.  The program pays out the $2 per watt rebate that Amendment 37 mandates, plus pre-purchases the Renewable Energy Credits (RECs) produced by a solar electric system for its first 20 years of operation at $2.50 per watt.  “Xcel sends the rebate and REC payment about 60 days after installation,” Simmons continued.  “Vibrant Solar, as well as most local installers, carry the rebate, allowing the homeowner to pay only the after-rebate price.  This means an average home system, which costs roughly $40,000, only costs the homeowner $14,000 out of pocket.”  

Simmons continued to explain that, as of May, 2008, all power companies in Colorado must install a “net meter” when a homeowner or business installs a solar system.  “The net meter can accept the electricity produced, running the meter backward. The power companies must purchase electricity produced by a solar electric system for retail, the price they charge per kilowatt hour.  The right-sized system can therefore zero out the electricity bill, aside from a couple of flat fees.”

“So, at least for Xcel’s Colorado territory,”  Simmons continued, ”with the right system and only about 40% of the total price tag a homeowner can zero out their bill and most of their carbon emissions.”

 The Governor’s Energy Office also works with smaller power companies to help them offer rebates, though none comes near the Xcel Energy rebate… which is one of the best in the country.

In addition to the Colorado State government’s support and the Xcel rebate, Congress may initiate the true boom of solar within the next week or two.  Both the House and Senate have passed extensions of the federal tax credit program, one increasing the residential cap from $2,000 to $4,000, the other removing the cap entirely, making the residential credit the same as commercial, and 30% of total cost.  “The program would be extended six years or eight years,” Simmons explained,  “long enough for serious investment in the booming industry.  Either bill would cause residential solar electric systems to be very affordable, while commercial would have the chance to grow.”

Simmons then said that there are also negative forces at work in this boom industry.  “Manufacturing capacity is growing, but in late summer each year a shortage of panels hits,” he explained.  “This is due to summer being the busy installation season. This was exacerbated in 2008 by Europe’s, and particularly Spain’s high demand for solar photovoltaic panels.  The US dollar was weak, and massive government programs covered most of the cost.  European installers bought most of the worldwide supply this year.”

“Otherwise, as NPR reported last Thursday,” Simmons continued, “the industry is strapped for investment capital– most solar installation companies are undercapitalized.   They are growing faster than their original capitalization can tolerate.  Some consolidation is already happening, while some smaller companies are simply going out of business having not survived their startup, even in this booming industry.”

“Meanwhile, the federal tax credit program expires at end of 2008.  Commercial system sales have already dropped off, as the installers are past the point where they can write a new contract and guaranty the system would be online to take the text credit by year’s end,” Simmons said.  “Hopefully, Congress will come to agreement on the new bill and get it in place by year end.”

This is the state of the industry today.  Strong in some ways, shaky in others.  And all too temporary.
Then the challenges for solar companies will be maintaining supply, and handling meteoric growth.  It will be an exhilarating and dangerous time for this young industry.

Mark Simmons

Marketing & Sales Director

Vibrant Solar, Inc.

No Comments »

As I stated before, Colorado now has some of the best solar incentives in the entire nation. This was started when Colorado citizens passed amendment 37 which forces the large investor owned utilities like Xcel Energy and Aquila to offer a $2.00/watt rebate for on-site solar installations and requires them to get 10% of their energy from renewable sources by 2010. The legislation also has a set aside earmarked for solar of 4% of the 10% total. Just last year the Colorado legislature enacted and Governor Bill Ritter signed into law HB07-1281 which sets a new goal of 20% by 2020. Xcel Energy and Aquila quickly implemented programs to meet these goals. Xcel Energy currently offers incentives on small systems (10KW or less) of $4.50/watt rebate. $2 of this is the rebate mandated by amendment 37 and $2.5 represents the purchase of the Renewable Energy Credits (RECs) generated by the system over 20 years. Aquila is similar but currently offers $2.00/watt for the RECs.

At first glance, the 25% goal would seem to insure that the rebates will be available for many years to come. It turns out that this may not be the case, at least for Xcel Energy. The Solar Rewards program has been successful far beyond Xcel’s initial estimate. Amendment 37 allows the utilities to charge up to a 2% surcharge on everyone’s electric bill to pay for the program. Xcel Energy initially only charged .6% thinking that this would be plenty. Unfortunately for them, it was far too little. Xcel didn’t understand the drive people have to try and help the planet and to make some money from THEM for a change. The program received so many applications that by the fall of 2007 they were in the red for the program and losing money. In New Jersey when this happened, they shut the program down. Here they didn’t stop the program or even attempt to slow down the applications. Xcel deserves kudos for that. In the fall of 2007, they have applied to the PUC to raise their surcharge to the full 2%. That still has not happened, but the program is still going strong. Of course a lot of credit goes to people like Rick Gilliam who drafted amendment 37 in such a way that Xcel CAN continue the rebates.

Xcel’s continued funding was welcome news but in the fall of 07, Xcel delivered quite a shock to the solar installation community. They filed their 5 year plan (http://www.xcelenergy.com/docs/Volume1-Sections1-1through1-5.pdf) which showed their vision of the future. In that plan, they listed the kilowatts of on-site solar that they were planning on installing. For 2008 it was 16megawatts – about the same as was installed in 2007. For 2009 it dropped to 4. For 2010 it dropped to 2, then it started alternating year to year between 1 and 2. This galvanized the solar community. If these numbers were followed, it would kill the newly revitalized industry in Xcel’s territory.

Since then, the Solar Rewards staff has met with COSEIA ( the Colorado Solar Energy Industry Association. http://www.coseia.org ) and possibly other groups to try and calm our fears. What they said was that Xcel viewed the numbers as MINIMUMS to meet their production goals as set by law. They were not MAXIMUMS. They also stated that they did not currently foresee pulling the plug on the small systems rebates - ever. Their feeling was that this program involved such small numbers that it would not impact their long term plan. They also have taken the stand that Amendment 37 requires them to continue to offer the $2/watt rebate forever, not just until their renewable energy goals were reached. They also pledged to give everyone 90 days notice when they plan to decrease the REC payment.

This has somewhat relieved the tension in the front range PV industry, but not completely. There is really nothing to stop Xcel from limiting the number of rebates they offer nor to keep up the $2.50/watt REC purchase price. COSEIA has filed protests against Xcel’s plans and is currently trying to work with the PUC to get some sort of assurances for the next several years. I would like to see the incentives somehow indexed to the cost of PV and have them go down as PV costs go down. Without this, it will be very perilous to be a PV designer/installer.

So what do I think will happen to the incentives? Its tough to know. Xcel would be perfectly happy to keep things as they are. Their costs will be covered by the 2% surcharge and they get to look good earning green karma points. Left to themselves, they might leave the incentives as they are or gradually reduce them to keep the program from losing money as more and more people install PV on their businesses or homes. The wild card here is the PUC and the legislature. It is the PUC’s job to keep the power providers in check and to look out for the financial well being of utility users. Once the on-site PV requirements are met by Xcel Energy and the other power providers. The PUC may decide it is their duty to step in and end or reduce them. A lot will depend on how people interpret amendment 37.

For now, the rate of applications to the Solar Rewards Program continues to grow. It is not hard to envision a future where the incentives are curtailed or removed all together. In fact, I would be surprised if 2009 doesn’t see a reduction in the REC payment.

My conclusion, understandably considering what I do for a living, is that people who are on the fence should jump and buy a PV system now before the prices go up.

No Comments »

Vibrant Solar Inc would like to thank the people who worked so hard to get the renewable energy standard passed in Colorado and who continue to that work today to make renewables a large part of our power grid. A special thanks goes to Rick Gilliam, representing Western Resource Advocates, and the other advocates who helped draft and pass Amendment 37 in Colorado. Their forethought and dedication have given us one of the best incentive programs in the country. I’d also like to call attention to the members and management of COSEIA, CRES and the other renewable energy groups who have been working tirelessly to make solar the long term future of Colorado. They have created an environment of cooperation and trust in the Colorado solar industry and their efforts have born amazing fruit.

Next, I would like to take a moment to thank Xcel Energy. “You mean Xcel Energy, the power company? The guys who are trying to build a bunch of new coal-fired plants in Colorado?” you may ask with surprise. Yes that Xcel Energy. Xcel Energy is like any other power company in that they exist as a business to make money for their shareholders, they have a monopoly in their service areas and everyone has to buy their energy from Xcel. This makes them a frequent target of peoples ire.

In spite of their seemingly cushy position, they have seen the writing on the wall and gone the extra mile to make renewable energy a part of their power production. They have the largest wind production of any utility in the country and, after a little initial resistance (OK, a lot of resistance), have heartily embraced PV through the Solar Rewards program. Through Solar Rewards, they have implemented some of the best policies in the nation to make this program run smoothly and easily.

The team at Solar Rewards has been seriously over-worked and underpaid, but they have risen to the challenge and have continued to be helpful and enthusiastic. After hearing horror story after horror story about other rebate programs in California and New Jersey, its amazing how painless the process is here.

I think few people appreciate what a difficult position these people are in. Because of Xcel’s government granted monopoly, they have a lot of serious constraints imposed on them by the PUC (Public Utilities Commission). This can make things very difficult. For example, by PUC rules, no one is allowed to produce electricity in Xcel’s territory and sell it to anyone but Xcel Energy. The Solar Rewards people had to work with the PUC to allow them to waive this restriction for on-site solar and we now have the option of third party financing for systems over 10 kilowatts. There are many other examples of this and a lot of the hitches in the system come from trying to work with the PUC rules.
The solar rebate process has not been without its snags and growing pains, but the people working on it have made it one of the best programs in the country and I thank them.

No Comments »

Welcome to WordPress. This is your first post. Edit or delete it, then start blogging!

1 Comment »