The check that landed in my family’s mailbox recently wasn’t much in monetary terms—just $9.73—but to us it was huge in other ways.
The payment from Xcel Energy, Colorado’s largest utility, meant that the grid-tied solar photovoltaic system we installed a year and a half ago on our home in the foothills west of Denver had produced about 200 kilowatt hours more power than we consumed in 2008. At least as far as home electricity is concerned we are slightly better than net zero, both in carbon emissions and costs.
In a broader and more important sense, our modest refund reflects the success of progressive policy choices Colorado voters and officeholders made in recent years that have made it far easier for homeowners like us to follow a greener path. Those policies have put Colorado in the vanguard of what Democratic Governor Bill Ritter likes to call the "new energy economy." The state now ranks fourth in the nation in solar production, with three-quarters of the 32 megawatts of output coming from rooftop installations like ours.
In 2004, Colorado became the first state to enact by popular vote a renewable portfolio standard, or RPS requiring large utilities to generate a set percentage of their power—10 percent by the year 2015—from renewable sources such as wind, solar, or geothermal. Xcel quickly found it could meet that standard about eight years early, so in 2007 the state legislature doubled the RPS to 20 percent by 2020, and included a less ambitious standard for electric co-ops, or private, independent electric utilities. Today, 28 states and the District of Columbia have some form of RPS on the books.
The RPS in Colorado has been a powerful driver for renewable energy that has benefited green-minded consumers by making residential PV systems far more affordable. Because of the RPS, Xcel established a Solar Rewards program with a combined rebate and credit of $4.50 a watt to homeowners and businesses that install small solar and other renewable systems. Another bonus for these consumers is that? Colorado’s net metering law requires that utilities pay homeowners with renewable power systems for any excess power they pump into the grid.
Since 2006, more than 4,900 Colorado residents and businesses have enrolled in the Solar Rewards program, receiving almost $57 million in rebates and credits.
My family’s numbers tell the tale. Our 4.3 kilowatt, 20-panel PV system’s total cost was initially $34,000. Xcel’s rebate and credit dropped the cost to $15,000. The federal tax credit reduced it by another $2,000, as did a state sales tax exemption. Net out-of-pocket cost: about $11,000.
That’s still a substantial investment, but considerably less than it would be without the incentives. And creative financing is on the horizon in Colorado, thanks to 2008 legislation that allows cities and counties to use their bonding authority to offer low-cost loans to homeowners for the upfront cost that can be repaid over time through their property taxes.
Last year, Congress approved legislation removing the $2,000 cap on the 30 percent federal tax credit for solar, meaning a more generous federal incentive. Responding to that, Xcel reduced its own credit by $1 per watt, so the combined credit and rebate of $4.50 a watt that we received is now $3.50.
For 24 hours after Xcel announced the reduction, consumers could take advantage of both the older $4.50 per watt incentive and the new higher federal tax credit if they didn’t plan to actually install until 2009 when the new federal law takes effect. That prompted a stampede of 1,414 applications to Xcel in one day. The pace of Solar Reward applications has since slowed, though it’s hard to tell how much of that is because of the lower credit and how much is tied to the worsening economy.
But even in dark economic times, the outlook for solar remains bright in Colorado. This year the state legislature is considering a measure that gives purchasers of new homes the option to have their house pre-wired for solar or come with solar panels installed.
And at our house, where going solar has reduced our carbon footprint by about four tons of CO2 a year, we’re trying to decide how to spend that $9.73.
Tom Kenworthy is a Senior Fellow at the Center for American Progress.