On October 24, 2008, Xcel Energy announced that incentives for PV systems in Colorado would be reduced from US $4.50 per watt to US $3.50 per watt. The Connecticut’s Clean Energy Fund (CCEF) just announced reductions to the PV rebate cap levels (excluding solar lease applications) from $5 for the first 5kW to $4 for the first 5kW; and from $4.30 for the next 5kW to $2.50 for the next 5kW for all residential PV systems commissioned on or after January 1, 2009. The previous rebate levels will continue to apply to PV systems commissioned prior to January 1, 2009.
What’s going on here?
“Incentive administrators aren’t cutting the incentives just to cut them,” said DSIRE’s Justin Barnes. “But with the eight-year extension of the federal Investment Tax Credit (ITC), they realize they can reduce the amount of the incentive while keeping the aggregate level of support about the same, and be able to support more projects,” he said.
Take Maryland, for example, where the state’s PV incentive program has been oversubscribed for some time, with about 180 applicants on a waiting list. It’s the same in New Jersey: oversubscribed and a waiting list. “It’s good that people are responding to the rebates,” said Barnes, “but it’s not good for incentive administrators, consumers, or the solar industry to have people waiting and waiting and waiting.”
Coincidentally, New Jersey is currently in the planning stage for the state’s 2009 incentive program. “The New Jersey Board of Public Utilities probably feels that it can do more with the money by reducing rebate levels, and get the same, if not greater, level of participation in their program,” said Barnes.
So should we expect to see more of these reductions in incentive programs across the U.S.?
“It’s entirely possible,” said Barnes. “Over the past few years, subscribership to incentive programs has been robust. In fact, when Maryland launched its 2008-2009 solar rebate program in July 2008, the entire year’s worth of funding was reserved in a month. Florida’s PV rebate program was fully subscribed in a single day.”
More subscribers to incentive programs means more installations, and more installations mean a healthier solar industry.
This is all well and good for communities with incentive programs. But what about those without incentives?
“The federal ITC might encourage communities or states to consider implementing incentive programs,” said Barnes, “because consumer demand for these types of programs is on the rise. States might understand that the federal ITC is a real bonus, lowering the amount of local investment required to operate an effective program, but retaining the same localized benefits.
Will DSIRE keep track of the incentive fluctuations? “Of course DSIRE will continue to track incentives,” said Barnes, “paying particular attention to news about incentive reductions during the next few months. But over time, we all know that incentives for PV will continue to be reduced, eventually disappearing altogether. They’re not meant to be in effect forever. So to a certain degree it will just be business as usual at DSIRE.”