Colorado’s solar energy industry is reeling from two announcements made by Xcel Energy last week. On Wednesday, Feb. 16, Xcel announced it was drastically cutting rebates and incentives on its Solar*Rewards program, which subsidizes residential and commercial solar energy systems. Xcel cut rebates from $2.35 to $2.01 per watt, and is seeking approval from the Colorado Public Utilities Commission to reduce them even further, from $2.01 per watt to 25 cents per watt.
The following Thursday, Xcel announced it would not be accepting any more applications for the Solar*Rewards program until the PUC makes a decision on further rebate cuts.
An Xcel spokesperson told Boulder Weekly, the market for solar panels and solar energy has grown enough and become stable enough that smaller subsidies are called for. Previously, subsidies dropped on a fixed scale — after a certain number of solar energy units were installed, subsidies dropped to the next tier.
Leaders in the solar industry agree that subsidies should continue to be ratcheted down as the industry grows, but say that such a dramatic cut will cripple local businesses and potentially cost thousands of jobs.
Rebates and other incentives are a driving force in the state’s solar energy industry, which has grown from 40 companies in 2004 to more than 450 currently. Steady, predictable adjustments to subsidies are essential to market stability, according to Namaste Solar President Blake Jones, who called Xcel’s announcement “shocking.”
Neal Lurie, executive director of the Colorado Solar Energy Industries Association (CoSEIA), says that prior to Xcel’s Feb. 16 announcement, subsidies were already in line with falling consumer costs, and the Solar*Rewards program was working.
“We have seen that this model that has been developed in Colorado has been touted as a national model,” Lurie said. “That’s an industry best practice that other states are also implementing as well.”
And according to Lurie, the effects of Xcel’s decision are already being felt.
“Within 24 hours of Xcel making this announcement, I can’t tell you the number of companies that e-mailed me that they were closing up shop … They were already teetering on the brink and this was the final straw that has made it just untenable.”
The indefinite suspension of the rebate program has effectively frozen sales of solar energy units, Lurie said, and this has raised concerns over Xcel’s handling of the program.
“The fact that they are tasked with administering a program that could cut into their profits, there is a clear conflict of interest,” Lurie said. “Xcel knows that by being able to start a program and then stop a program and then start a program again, that kind of instability erodes the market growth of clean energy and destabilizes the marketplace.”
This has left local companies like Namaste and Simple Solar in a state of limbo, with customers reluctant to purchase new systems until rebates are reinstated.
CoSEIA predicts that this interruption could result in 2,500 to 3,000 jobs lost by the end of the year. That has left some companies having to decide whether to downsize or hold onto employees in hopes that business will resume in the near future.
“There are companies in Boulder that as of early last week had open positions, and by the end of last week they were having meetings on decreasing their workforce,” Lurie said.
“It’s bad for the economy. At a time when Colorado’s recovery was starting to gain some legs, the idea that we would take one of our most promising industries and to be able to pull the rug out from under it, that’s devastating.”
The public can submit comments to the Public Utilities Commission online at www.dora.state.co.us/puc/consumer/ ConsumerComment.htm.
CoSEIA has also scheduled a rally for Feb. 25 on the west steps of the State Capitol at noon. Details can be found at www.coseia.org.
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