• Local Government Policy Alerts

• State Legislation and Regulatory Alerts

• National Policy and Regulatory Alerts

• Share your policy ideas with CRES

Local Government Policy Alerts

CRES Addresses Critical Need for Stable Solar Incentives

DENVER―February 22, 2011―The Colorado Renewable Energy Society today addressed the critical need for sustainable policy for solar incentive programs, in order to protect the growing solar industry as well as Colorado’s economy.

Xcel Energy recently took actions that effectively suspended its solar incentive program for on-site projects. This action immediately dropped the purchase price of renewable energy credits (RECs) from 35 cents to 1 cent and lowered the total incentive from $2.35 to $2.01. Along with this immediate drop in the incentive, Xcel Energy put a cap of 3 MW on any new applications into the program. This cap was reached in less than 24 hours, effectively suspending the solar incentive program on the afternoon of Thursday, February 17, 2011.

In addition to lowering the REC incentive, Xcel Energy filed a request to the Public Utilities Commission (PUC) to lower the rebate amount from $2.00 per watt to 25 cents. If the PUC approves this request the rebate portion of the incentive would be lowered by 88%. Also, no applications will be taken for on-site solar project until the Public Utilities Commission rules on a filing by Xcel Energy.

Xcel Energy’s actions are a prime example of how unstructured incentives can impact the solar industry as well as Colorado’s economy. Since the announcement was made last week, businesses have already reported canceled contracts and lost business. It is critical that a stable, long-term solar incentive program be initiated immediately. A program is needed that does not allow market shocks to the emerging and growing solar industry.

CRES, Colorado’s renewable energy resource, has the experience and resources to help build and advise on sustainable programs for renewable energy and will be participating at all levels to support a stable long-term solar incentive going forward.

“Not only is a stable policy critical to the solar industry, but also to Colorado’s immediate and future economic growth,” said Tony Frank.

To submit comments to the PUC on Xcel’s Energy proposed changes please click on the link below:
http://www.dora.state.co.us/puc/consumer/ConsumerComment.htm

In addition, an event was scheduled in support of a more stable solar incentive program for Friday, February 25, 12:00 p.m., held on the west steps of Colorado State Capitol building in Denver.

Black Hills Energy Suspends Solar Program

Black Hills Energy serves electricity customers in the Pueblo region in southeast Colorado and is no longer accepting applications or providing incentives for new solar projects.

According to Black Hills, they suspended their solar program due to 'strong customer participation' that led to upfront costs. However, it can also be argued that a coal plant has significant upfront costs. Natural gas fired power plants also have upfront costs. Both are commonly financed and repaid, often through 60 year bonds. If Black Hills can finance fossil fuel generation over 60 years, why can't they finance renewable generation over 20 or 30 years? This is allowed under Colorado law (HB-1001).

The Colorado Solar Energy Industries Association (CoSEIA) has created a petition to urge Black Hills to restart its solar program. You can sign the petition by clicking here: Sign the Petition to urge Black Hills to restart its solar program

The solar industry is one of the fastest growing industries in the world. According to new research from The Solar Foundation there are more than 93,000 solar jobs in the U.S. The number of solar jobs has doubled in the last year. Colorado is now #2 in the nation in solar jobs per capita. Black Hills decision will likely hurt job growth for the solar industry in the state.

City of Boulder’s Ballot Initiative 2B – Utility Occupation Tax

Initiative 2B would create a five-year replacement tax (occupation tax) on Xcel Energy for the existing 3% franchise fee that Xcel Energy has been collecting from their City of Boulder customers for the past 20 years. City of Boulder residents would not see any additional charges on your monthly Xcel Energy bill as a result of 2B.

The reason for 2B is that the city's franchise agreement with Xcel Energy runs out at the end of this year. If 2B passes, Xcel Energy would continue to supply electricity and natural gas, but would no longer collect the 3 percent franchise fee as they have been doing. The temporary tax would replace the revenue the city has received from the franchise agreement and give the City of Boulder time to explore other options for renewable energy development and conduct a comprehensive study of the city's energy goals and alternatives

Read more: Boulder willing to let Xcel franchise lapse while it studies future energy options - The Denver Post http://www.denverpost.com/business/ci_16294228#ixzz123jsVWCW

Read more: Boulder willing to let Xcel franchise lapse while it studies future energy options - The Denver Post http://www.denverpost.com/business/ci_16294228#ixzz123jFZTrI

Resources:

Excerpts above were taken from an article in the Boulder Daily Camera by Sean Maher on Sept 20, 2010,
http://www.dailycamera.com/business-columnists/ci_16094831
and from an article in the Denver Post on October 10, 2010, by Mark Jaffe, http://www.denverpost.com/business/ci_16294228

Summary of the 2B Ballot Issue by the League of Women Voters of Boulder County: http://lwvbc.org/2010bcity2B.html

You can learn more about Ballot Measure 2B, clean energy, and the Xcel Franchise agreement on October 13th at 7pm at the Boulder Meadows Library, 4800 Baseline Road, Boulder, hosted by Clean Energy Action.
http://www.cleanenergyaction.org/cutting-through-confusion-boulders-ballot-issue-2b-other-tax-measures

State Legislation and Regulatory Alerts

National Policy and Regulatory Alerts

Treasury Grant Program – 30% grant, in lieu of commercial solar property taking the solar Investment Tax Credit (ITC).

Prior to the financial crisis, many renewable energy projects relied upon third party tax equity investors to monetize the value of federal renewable energy incentives. The economic downturn dramatically reduced the availability of tax equity, severely limiting the financing available for renewable energy projects. The American Recovery and Reinvestment Act of 2009 created the Treasury Grant Program (TGP), which allows the owner of commercial solar property to receive a 30 percent grant, in lieu of taking the solar Investment Tax Credit (ITC). Applicants are eligible for the Treasury grant only if they commence construction on projects by December 31, 2010 and complete construction by December 31, 2016.

The Treasury Grant Program is needed because many renewable developers have little or no tax liability and thus are reliant on "tax equity" financing to benefit from the ITC. The TGP eliminates the need to secure scarce tax equity to finance a commercial solar project. The absence of tax equity financing continues today, and will likely persist through 2012. Due to global economic conditions, a big gap remains between the total amount of financing renewable energy developers need and what money is available. Indeed there were 20 tax equity providers in 2007, and in 2009 that number had dropped to 11. Presently, the TGP grant program expires at the end of 2010. However, the tax equity market has still not recovered from the Wall Street collapse.

Resources:

Excerpts above were taken from the Solar Energy Industry Association webpage on Federal Issues:
http://www.seia.org/cs/treasury_grant_program

A September, 2010 presentation by SEIA highlighting the benefits of the Treasury Grant Program and likely impact if not extended is found here: http://seia.org/galleries/pdf/Tax_Equity_Crisis_Slides.pdf

Description of the ITC “grants” in lieu of tax credits, and application instructions here:
http://renewableenergylaw.blogspot.com/2009/08/us-treasury-department-accepting.html