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Connecticut Solar Power: Small State, Large Dreams and Depleted Funds

Reginald Norris's picture
Clean Energy Experts

Prior to joining Clean Energy Experts, Reggie ran operations for the first completely carbon-neutral water company in the U.S., Nika Water Company that donates 100% of its profits to support...

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It may the nation’s third smallest state, but Connecticut’s electric rates are among the highest in the country. In 2009, Connecticut’s average rate was more than 74% above the national average and up until the end of October, when New York officially surpassed them, Connecticut’s electric rates trailed only those of Hawaii’s. As a result, it was not surprising to see Connecticut make the necessary legislative changes to support cheaper renewable energy, particularly solar power. Specifically, back in 2004, Connecticut created the Connecticut Clean Energy Fund which was designed to support the statewide adoption of solar power and other renewable energy sources. Now, 6 years later, the Connecticut Clean Energy Fund is depleted and we can only hope that the state will continue to support the adoption of solar power and other renewable energy sources throughout Connecticut.

Connecticut Clean Energy Fund

Connecticut used to be known for having some of the best solar incentives in the nation. In 1998, a landmark restructuring of the state’s electric utility industry- PA 98-28- permitted competition. While there are two investor owned utilities (IOUs) who provide the poles and wires, residents now have a choice of a number of different electricity retailers. This act also established a small surcharge to be added to electric bills to provide funding for the Connecticut Clean Energy Fund (CCEF). This surcharge began in 2000 at $.0005 per kWh and has subsequently risen to $.001 per kWh.

The CCEF not only educates consumers on the benefits of clean energy, but, as stated above, funds the major solar and other renewable energy incentives in Connecticut. Some of the highlights of what incentives CCEF offers:

  • Residential Solar PV Rebate System – CCEF offers up to $15,000 in incentives per residence, based on customers’ expected electric usage up to 10kW. Residents receive $1.75/watt for the first 5 kW, then $1.25/watt for the next 5kW. At this time, there is approximately $1.5 million left in funding which is equivalent to providing solar power on about 100 homes.
  • Residential Solar Lease Program – A maximum 20 year lease is available to family homes with an income up to twice the area’s median income. No money is required down, but there are fixed monthly payments which you can see here. CCEF invested $38.6 million in the program but ran out of money in February 2010. This is one of the first leasing programs of its kind in the nation, and through rebates and tax credits allows moderate to low income residents use renewable solar energy. Also, it is unique in its partnering with financial institutions to leverage federal business credits, giving benefits such as low fixed payments and zero down payments, and allow funding to come back to CCEF which benefits Connecticut ratepayers.
  • On-Site Renewable Distributed Generation Program – Through this program CCEF has committed to adding 16.5 MW to Connecticut’s renewable generating capacity by 2010. While the incentive can be used for wind, biomass, and fuel cells, this is also the best of class incentive for commercial and public buildings. Solar PV, for less or equal to 100kW, gives business owners $2/watt ($4/watt for non-profits). For more than 100kW but less than 200kW, business owners receive $1.25/watt ($3.50/watt). In July 2009, because this project had overextended itself for the 2010 fiscal year, grants per watt caps were lowered about $1.50/W. This summer, due to budget constraints, only 50% of funding was available compared to the 2008-2010 Plan. Grants now are offered under competitive Request for Proposal basis.
  • ARRA Commercial Solar PV Program – In October, CCEF turned on funding for this program (after it ran out of money in 2009 for awarding over $77 million) through the extremely generous grant program of the American Reinvestment and Recovery Act. Funding is technically available through April 12, 2012, but the $3 million in subsidies is expected to be exhausted much sooner. Applications are reviewed on a rolling basis and this funding will go quickly. CCEF has already asked for an additional $8.9 million in state money for the program, but is still awaiting approval from the Department of Public Utility Control.

Besides the Connecticut Clean Energy Fund, there are a number of local and low interest loan programs as well as rebates for appliances offered through the state and the utilities. Through a combination of these programs, Connecticut has made significant strides at going solar. Despite a tougher funding environment, Connecticut has seen very respectably growth in grid connected solar installations, approximately 16% from 2008 to 2009. With the US solar market’s projected growth of 40% each year in the coming decade and Connecticut’s high electric rates, it is important that Connecticut continues its dedication to renewable technology, even with inconsistent government funding.

Additional Solar Incentives

On top of the state subsidy, the entire state of Connecticut has a net metering policy which means that you only pay for the net amount of electricity that you use. With net metering, solar customers are able to “bank” the excess electricity their solar system generates (up to 2 MW) and carry over kilowatt-hour credits to use the following month. At the end of the year, the utility pays the customer for any remaining kWh credits. Photovoltaic customers have the added bonus of having their annualized net excess generation calculated on a time-of-use basis, meaning that for energy that their home provided to the grid during peak periods, they will receive a larger financial benefit.

Connecticut’s government has also even gone so far as to exempt the value of a Class I (solar, wind, etc.) renewable energy source from an owner’s property taxes. Unlike other home improvements, you do not have to pay increased property taxes even though the value of your home will increase with a solar electric system. In Connecticut, there is also an exemption from sales tax for the sale or lease of solar energy electricity generating systems and a federal investment tax credit worth up to 30% of total system costs. With all these rebates, Connecticut cuts the average PV installation costs of about $43,000 in half.

Future Efforts

Beyond refunding the CCEF, the next step for Connecticut is to develop their own market for Solar Renewable Energy Credits (SRECs). A REC represents 1 megawatt-hour of electricity generated from an eligible renewable energy source. If a customer owns their PV system they can choose to maintain ownership of their RECs, albeit usually with a lower upfront solar rebate.

In Connecticut, Energy Consumers Alliance of New England (ECANE) purchases RECs for 3 cents per kWh for 3 years, and thereafter the RECs become marketable. Just like stocks, RECs are sold on an open market at varying prices correlated to demand. Utilities need to buy a certain amount of these credits to comply with a state’s Renewable Portfolio Standards. First established in 1998 (and revised many times since), Connecticut’s RPS requires each electric supplier to have at least 27% of its retail load be renewable energy by January 1, 2020. Connecticut has separate portfolio standards for different Classes of energy generation. Class I includes energy derived from solar, wind, fuel cells, etc…and electricity produced by end-user distributed generation systems (hint: residential and commercial solar panels).

Conclusion

Prior to moving forward with a solar installation, it is always a good idea to seek professional advice. This is especially true in today’s climate, with many solar incentive programs struggling to keep up with demand. Licensed solar energy installers can help you figure out the cost of a system, financing options, and the incentive for which you qualify.

For those interested consumers – homeowners and commercial business owners – that are unsure about solar power and how they should go about evaluating whether solar is right for their situation, please know that there are answers to your problems and all you need to do is a little research at great sites like the U.S. Department of Energy, Solar Energy Industries Association, and Solar Energy Installers. Remember, solar power is potentially a large investment, so it’s advisable to look into both the technical and financial considerations before either getting the wrong solar panel system or dismissing the chance to save with solar.

Courtesy: Solar Energy InstallersConnecticut Solar Power

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