Solar rebate programs are winding down. Austin Energy cut solar rebates for homeowners by a third. Xcel Energy will cut its rebate program by about 50 percent. The Long Island Power Authority made an immediate cut in its rebate program, and one scheduled for January. New York reduced its solar incentive by 50 cents per watt in October. Massachusetts closed its rebate program, and California is gradually decreasing its incentives. Australia also stopped its rebate program. However, a 30 percent federal tax credit still exists.
Popularity and the impact on budgets are the reasons why rebates are being reduced according to New York Times’ Green Inc blog. Barry Cinnamon, chief executive of installer, Akeena Solar, said, “I do not believe that the more the merrier is the right approach. Instead, I believe that incentives should decline as costs decline — that way ratepayer dollars are used most efficiently.” Cinnamon added, “The worst thing that can happen is for us to keep incentives high, see the rate of installations increase to a feverish pace, then run out of money and have installers go home for six months while more incentive funds are drummed up.”
Solar rebates were meant to “jumpstart the industry,” said Xcel spokesperson Tom Henley. Now it is time to “help maintain it as a viable industry.”
Blake Jones, president of Namaste Solar said the goal of incentive programs is to “increase the volume of project installations such that an economy of scale brings prices down, which allows us to gradually wean the industry of subsidies.”
New Jersey creates an alternative incentives program
In 2005, New Jersey ran out of funds for its solar power grant program. The program covered up to 60 percent of a solar power system’s cost. Rebates were lowered a number of times, and projects were put on hold. Installers reported layoffs. The state decided to create an incentive structure based on Solar Renewable Energy Credits (SRECs). The state purchases a certain amount of power from solar power system owners to meet their Renewable Portfolio Standard requirements. The state is currently creating 15-year contracts for the program.
“We looked at what was happening and it was pretty clear that the program was unsustainable. We just couldn’t fund — with taxpayer money — all of the demand we were seeing,” said Lance Miller, chief of policy and planning for the New Jersey Board of Public Utilities (BPU). 7
“When you look at the numbers, it’s clear that systems are getting installed,” said Miller. “Things are not exactly where they should be, but it’s better than having a rebate program that is continually running out of money. We’re still working on making this better.”
“New Jersey is certainly having some issues — that’s apparent. But they’ve done a great job in looking at creative alternatives that will get us beyond rebates,” said Shaun Chapman, east coast campaigns director for the Vote Solar Initiative. “Is that any consolation to the business-owner who’s having trouble getting jobs done? Probably not. But it’s important to use that experience so others can move in a different direction.”