SOLAR TODAY - May 2011

reprieve for colorado’s Pv incentives

The Colorado Public Utility Commission on March 18 approved a compromise plan to revive the popular Solar Rewards program for grid-connected photovoltaic (PV) systems. The plan was negotiated by Xcel Energy and the state’s solar installer community, led by the Colorado Solar Energy Industries Association (CoSEIA).

Under the new plan, effective March 23, up-front rebates for small customer-owned systems will drop to $1.75 per watt for the first 4 megawatts, and taper off to zero as further megawatt targets are met. Meanwhile, performance-based payments will ramp up from 4 cents per kilowatt-hour to 14 cents.

For third-party power purchase agreements and larger systems, up-front rebates end immediately. Performance-based payments begin at 16 cents per kilowatt-hour for small customer-owned systems and 15 cents for larger systems, both scaling back to 11 cents as megawatt targets are met.

The plan will help to pay for 60 megawatts of new distributed PV capacity. The original Solar Rewards program has installed 70 megawatts.

The agreement ends a five-week moratorium on solar incentives that stalled all new-system sales. And the new performance-based system will be revisited within a year, as Xcel Energy in May is due to submit a plan for complying with its 2013 renewable energy targets.

The negotiated plan is “a short-term band-aid solution,” said Blake Jones,
president of Namasté Solar in Boulder. “We’re happy it’s back up and run-
ning, and we think there will be an initial surge of sales as customers who
were waiting for an outcome take up their projects again. Then it will be
very interesting to see how the performance-based incentive works as the
market develops.”
Jones believes that the performance-based incentive system will reward
installers and customers who take installation quality and long-term mainte-
nance very seriously. Because of the fall-off in up-front price support, estab-
lished credit and stable financing relationships will be more critical. This
may be to the advantage of solar-leasing vendors. The new system may help
to sell high-end high-efficiency modules, and may also have implications for
the real estate market: A home seller passes the power-production income
stream to the new owner.