New incentives ramp up Connecticut's commitment to solar
Published 7:31 pm, Tuesday, July 12, 2011
By Vinti Singh
State officials are hoping to encourage homeowners in Connecticut to invest in solar energy, setting a goal of installing the energy panels on about 3,000 homes by 2022.
The government will also be promoting commercial solar projects, such as solar farms, and require Connecticut utility companies to get more of their energy from renewable sources.
State officials are debating how those different programs will end up being administered, but that they are coming is a good sign for the renewable industry in Connecticut, attorney Brad Mondschein said.
Residential panels will be paid for through surcharges already on residents' electric bills, while commercial projects will be paid for with a new surcharge.
"The theory is the surcharge will be offset by lower electric rates because in the solar market, prices are fixed," Mondschein said. "It's not like natural gas that the price fluctuates in the market."
The rules are part of the sweeping energy bill the state Legislature passed in June and Gov. Dannel P. Malloy signed into law July 1. The new regulations should attract solar contractors, who tend to flock to the states with the best incentives, Mondschein said.
"We saw a huge flow of contracts into New Jersey and Massachusetts, and now we'll see the same thing in Connecticut," Mondschein said.
One of the incentives is what Department of Environment and Energy Protection Commissioner Dan Esty is calling the "Green Bank." The bank will be funded by no more than one-third of the revenues coming from the Connecticut Clean Energy Fund (about $7 million a year) and will be used to fund residential solar projects until 2022.
The new law also requires utility companies to enter into new $8 million contracts with renewable energy providers each year for the next six years.
One of the contractors eyeing this incentive is Borrego Solar, a Boston-based commercial solar installer. Borrego does business in California, New Jersey, Massachusetts, Pennsylvania and Texas -- the states that offer the best solar incentives, said Dan Berwick, the company's director of policy and business development.
"The solar industry is moving from an expensive niche technology to cost effective," Berwick said. "We're entering that decade. But in order for there to be an opportunity in a given state, there has to be marginal incentive."
Experts agree New Jersey has the most competitive incentives in the Northeast. Connecticut's new commercial requirements are more attractive than even New Jersey's, Borrego said.
In New Jersey's model, the price of solar changes daily. So solar contractors take a risk when they build huge solar arrays, since they have to guess at future prices and risk losing profits.
The Connecticut model requires utilities to enter into longterm contracts with these companies at a fixed price. This means the companies know what the return on their investment will be decades out, making solar projects a more secure investment.
A third new Connecticut incentive allows utility companies to build up to 30 megawatts of renewable energy generation plants in the next three years that they would be allowed to own. Connecticut's deregulation laws dictate that utility companies may not own any energy plants; they can only purchase from privately owned energy generation plants and can't make a profit on those purchases. The incentive temporarily lifts the ban and allows utilities to build and own clean energy generators of up to 5 megawatts.