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.