Image: CCEnergy
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Sally Ahnger's
3.9 kW rooftop PV installation is one of California';s many solar
projects that benefited from state incentives. Image: CCEnergy |
"Everybody agrees that it was oversubscribed. They needed to slow
it down, extending the limited pool of funds."
- Dan Pellegrini of Cooperative Community Energy (CCEnergy)
| Sacramento,
California - December 24, 2003 [SolarAccess.com] Christmas came a
little early this year for the California renewable energy industry.
Although it was decreased, one of the state's most generous, and popular
renewable energy incentive programs was recently exempted from the
recent state spending freeze. In an effort to alleviate the state's hemorrhaging budget deficit, Governor Schwarzenegger issued an executive order three weeks ago prohibiting new state contracts, contract extensions, and non-essential travel. As a result, the California Energy Commission (CEC), put their own freeze on the Emerging Renewable Rebate Program, bringing the burgeoning clean energy industry to a grinding halt and casting a pall over the future of the program which has succeeded in pushing the market price for solar down, and driving a nearly feverish rate of installations state-wide. The Emerging Renewables Program, which started in 1996, was re-funded on September 12, 2002, when Senate Bill 1038 was enacted into law authorizing the CEC to administer the program beginning in 2003 through 2006. The program grants capital cost rebates to assist customers who purchase and install renewable technologies for on-site generation below 30 kW. Increased sales encourage manufacturers and retailers to expand operations, which in turn should lower costs to consumers. Although other renewable energy technologies are eligible, solar photovoltaics (PV) consume the lion's share of funding. Some sources at the CEC questioned whether allocating monies from an existing account should be affected by the Governor's spending and contract freeze. Since the Emerging Renewables rebate funds do not come from the state's general fund, they felt the program should be exempt from the freeze. Sources at the CEC suspected the agency's own freeze was a precautionary move to allow a legal evaluation and confirmation that the rebate program could continue. Regardless of the legal details, the rebate program is back on track and should continue to drive market prices down and promote consumer investments in renewable energy systems, particularly the solar industry. While the exemption is great news for the industry, new changes to the size of the rebate will be less appreciated by consumers and the solar industry. On December 17, the CEC approved a reduction in the rebate program from $3.80 per watt, to $3.20 per watt. The rebate amount was originally scheduled to drop to $3.60 per watt as part of the program's 20-cent per watt reduction occurring every six months. A record number of rebate applications submitted this year has depleted the Emerging Renewables Fund faster than expected, leading the CEC to consider cutting the rebate to $3.00 per watt to stretch the rebate funds further. Participation in the program set record levels in 2003 with over 6,000 applications submitted, according to the CEC. In the first nine months of the new program, approximately half of the total funding allocated through 2006 has been paid or reserved. According to Dan Pellegrini of Cooperative Community Energy (CCEnergy), a California solar energy cooperative, renewable energy representatives led by the California Solar Energy Industry Association (CalSIEA), have worked closely with state officials to come up with a rebate rate schedule that will make best use of limited funds . "I'm glad they made the decision," Pellegrini said. "$3.20 a watt is less than what we would have liked but better than what could have happened. Everybody agrees that it was oversubscribed. They needed to slow it down, extending the limited pool of funds. In the end it's a good thing - it's just a little disruptive." The new rebate level is designed to strike a balance between promoting and subsidizing the solar industry while at the same time weaning them off those very same subsidies which many say have become a necessity. "The industry is absolutely dependent on it right now," said Pellegrini who explained the rebates are built around a similar Japanese model that helped bring solar PV costs down in that country. The idea is that money injected into the market through rebates triggers increased manufacturing, creating new facilities and larger manufacturing equipment, more product, and that increased production brings the prices down, in turn generating more demand. This cyclical model is intended to kick-start an industry that will be self-sustaining after the rebates have tapered off. Pellegrini said the Japanese rebates started as high as ten dollars a watt in 1994 (relative to US markets) and were slowly phased down to under a dollar per watt. "It was a very successful program," Pellegrini said. "It allowed the industry to get on its feet, produce at a much lower cost, and it gave the major manufacturers a stable and predictable cost structure. They knew what they were dealing with for many years, so they were willing to make a sizeable investment - that's what we're trying to do in California." And it's already made a noticeable difference. "When the rebate went to $4.50/watt, it suddenly made financial sense for regular consumers," Pellegrini said. "With the increased volume, market prices for PV modules have dropped considerably. At the retail level we seen a 30 percent reduction since two years ago." How the new rebate rate factors in is another question. "With the current market prices, and the current rebate structure, we are able to put together a system with overall costs and financing such that a purchaser will be net positive pretty much from the first month," Pellegrini said. Is $3.20 going to negate that? We will see how consumers respond to the new rebate levels, but itýs pretty clear that there is momentum in the market. We're right at that tipping point." |
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Further Information: • CEC Emerging Renewable Rebate Program • CCEnergy Cooperative Please Note: SolarAccess.com and Arizonaenergy.org do not endorse the sites behind these links. We offer them for your additional research. Following these links will open a new browser window. |