Lurie says that while he welcomes the increase in the overall target, it is unclear as to whether the new provision will hurt or help Colorado’s solar economy.
“The carve-out is no longer limited to solar and is now shared with other renewable energy technologies,” he says. “To what extent the target will be satisfied with solar and other technologies remains to be seen.”
Much of the state’s continued growth depends on Xcel, Colorado’s largest utility, to meet state-mandated goals.
But a dispute over proposed transmission lines has curtailed the company’s plan for 355 mw of solar power generation by 2015 in southern Colorado, where most of the solar farms are located or have been proposed.
The Minneapolis-based utility partnered with the Tri-State Generation and Transmission Association in hopes of building a transmission line from Pueblo to Walsenburg by summer 2013, but opposition from landowners has stalled the project.
Due to uncertainty over when the line can be built, Xcel petitioned the PUC to scale back its original plan to 185 mw by 2015. This number includes commitments to buy the power generated by two 30-mw solar facilities being built in Alamosa County. Both projects are set to begin construction before the end of December to meet the deadlines for federal incentives.
The company currently has long-term agreements in place to purchase the output from two existing solar facilities in Alamosa County—including an 8.2 mw plant owned and operated by SunEdison, and a 17-mw plant owned and operated by SunPower Corp.
Xcel says the transmission line is necessary to get the power back to Denver and other population centers because existing infrastructure in the region cannot handle the increased loads.
Residential, Commercial Rebates
The Governor’s Energy Office is providing rebates for residential and commercial solar energy systems as well.
Since its inception in April, the “Recharge Colorado” program has provided rebates for 215 PV systems and 73 solar thermal systems throughout the state. But the program’s impact may be short lived.
Rebates are being offered on a first-come, first-serve basis through 2012 or until funds are exhausted. A little more than $1 million of the $5.8-million budget has not been paid out or reserved yet, according to Danielle Vaughan, rebate program manager with the Governor�s Energy Office.
Xcel’s rebate program is also in a state of flux. The utility is reducing the incentive rates offered through its Solar Rewards Program. Rates have dropped by more than 50% since 2009.
The rates will step down over time as distinct capacity levels, in megawatts, are reached for each system classification. The pace is at the utilities discretion but subject to approval by the PUC.
Federal policies have also played a critical role in spurring solar growth during the economic downturn of recent years.
Beginning in January 2009, federal legislation lifted a $2,000 cap on the investment tax credit homeowners receive for solar-electric installations and removed the prohibition against utilities’ use of the ITC. The bill also included an eight-year extension of the tax credit, which subsidizes 30% of the capital costs of solar-energy projects.
“The problem was that solar energy providers typically partnered with investment banks with the tax appetite to finance capital-intensive projects and claim the credit,” says Michael McCabe, partner, Oak Leaf Energy Partners, a Denver-based renewable energy development firm. “However, because the global recession and credit crisis put the brakes on the tax equity market, the ITC was no longer enough to stimulate demand.”
The American Recovery and Reinvestment Act came to the rescue with the creation of the Section 1603 Treasury Grant Program, launched in July 2009.
The program, along with a tax credit for renewable energy manufacturing facilities, is set to expire at the end of this year.
Extension Would Create Jobs
Studies suggest that a two-year extension of the grant program would create more than 1,800 new jobs in Colorado and generate as much as 100 mw of new solar power for the state—enough to power 20,000 homes.
The Solar Energy Industries Association and U.S. Partnership for Renewable Energy Finance, along with a spectrum of finance and solar companies, are among the groups advocating for the program’s extension until December 2012 or possibly longer.
At a minimum, groups are asking for Congress to restore $2 billion of the original $6 billion ARRA allocation that was redirected from the program for an extension of the “Cash for Clunkers” new car rebate. Restoring those funds would enable as much as $30 billion in additional renewable energy investments, according to SEIA.
For now, the evolution of the state’s renewable portfolio standard continues to be the biggest driver of the solar growth.