Colorado Solar Incentives Reduced

Colorado solar installers received an email notification yesterday from Xcel Energy saying that incentives for solar-photovoltaic systems in the state would be significantly reduced on October 24. Payments from the utility have been lowered from US $4.50 per watt to US $3.50 per watt.

Businesses in Colorado have known that a scale-back of the program would take place, but the announcement has raised more concerns among installers and industry advocates who believe that the state’s burgeoning market will significantly retract over the coming years.

Because Xcel Energy will soon reach its Renewable Energy Standard requirements, the company will have no legal obligation to purchase renewable energy credits from qualified solar systems. Also, the eight-year extension of the Federal Investment Tax Credit (ITC) will allow for a reduction in incentives while still ensuring a reasonable payback period for customers, say Xcel officials.

But many businesses in Colorado’s solar industry are upset with the announcement, saying that the market could retract by 30 percent or more in 2009. They also say that the ITC will have a relatively small impact if the state incentives are not maintained.

For more information on this issue, check out the latest RE Insider from Colorado Installer Blake Jones.

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