Mixed forecast: Clean energy braces for funding cuts

Colorado’s climate, ample sunlight and consistent investment in local think tanks haven’t hurt the state in its march toward renewable-energy leadership. Neither have federal dollars that were funneled into renewable initiatives a few years back.

When it comes to investment in renewable energy, “Colorado is absolutely at the forefront,” says Julie Herman of the Colorado Green Building Guild.

But what’s to come when the cash cow runs dry?

In the first quarter of this year, 723 megawatts of photovoltaics were installed nationally, which represents 33 percent growth for the first three months of 2012. Nationally, the non-residential market had a slow start in 2013 with just 242 megawatts of PV installed in the first quarter. Most state markets, Colorado included, shrank quarter-to-quarter. And while the Solar Energy Industries Association predicts overall commercial market growth this year, the rate could be significantly slower than in previous years. That’s because the non-residential market was hit hardest by decreases in federal- and state-level incentives, particularly Xcel Energy’s Solar Rewards program.

“We’re still seeing increases in cleantech jobs, but they aren’t as large as they were a few years ago,” says Scott Prestiege, energy industry manager at Denver Metro Economic Development Corp. “But Colorado’s cleantech industry is resilient,” he adds.

“The industry is a money-maker,” Prestiege says, citing not only installation and manufacturing opportunities, but innovation, too. Ascent Solar Technologies, for example, manufactures a thin film solar product initially built for military applications. To expand its presence, the company adapted its product, allowing customers to charge cellular devices with solar power.

Drive SunShine Institute (DSI), a Boulder-based nonprofit consulting firm, outfits local businesses with solar vehicles through outreach mechanisms like the Drive SunShine Sustainability Celebration, in which employees and suite managers can test-drive fleets of electric vehicles on site.

DSI recently assisted a large communications firm in implementing a pilot program designed to incorporate electric pick-up trucks with built-in generators into their suite. “These trucks are remarkable; they run the first 40 miles on renewable energy, then have a 300-mile gas-hybrid range,” says DSI Advisory Board Chair Ken Bietel. DSI is in the very early stages of partnering with various local municipalities as well. Companies can hope to see a return on investment in two to four years, according to Bietel.

“Demand for solar continues across the country,” says Carrie Cullen-Hitt, senior vice president of state affairs for SEIA. “The question is whether there are programs in place to support that demand.”

Thanks to local subsidies and federal grants, Colorado companies have been able to incentivize clean energy. But without continued federal support, will these operations remain sustainable?

Xcel Energy provides nearly 70 percent of Colorado’s cumulative energy needs. Its Solar Rewards program – which subsidizes residential and commercial small solar power rooftop systems thanks to a 2 percent surcharge added to monthly consumer bills – has been popular since inception in March 2006 and was named one of four notable solar PV incentive programs in SEIA’s 2012 annual report.

Entering 2013, Xcel was eight years ahead of schedule in meeting its wholesale renewable energy targets and only had 90 megawatts of distributed generation left to procure.
An impending solar cliff loomed over the market in the first quarter of 2013, leaving many uncertain about the program’s future.

“We ran out of capacity earlier this year,” says Xcel Energy spokesperson Mark Stutz. The company petitioned the Colorado Public Utilities Commission (PUC), which issued a ruling earlier this summer that approved Xcel adding another 30 megawatts and saved Solar Rewards.

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About $278 million has been invested in Solar Rewards alone. Of Xcel’s 1.3 million customers, Stutz estimates about 15,000 have installed solar or wind systems since 2006. As of April 2013, Xcel had about 161 megawatts on-site in its system. Demand has largely been residential, Stutz said.

Two educational programs – Boulder’s EnergySmart and Denver’s Energy Challenge – were created with a $25 million grant from the U.S. Department of Energy distributed as part of the American Recovery and Reinvestment Act to expand energy efficiency services to local residents and businesses.

EnergySmart, launched in January 2011, provides energy advising and financial assistance to Boulder households and businesses by helping constituents identify, prioritize and implement efficiency projects.

As of this July, EnergySmart provided services to 2,776 businesses, gave $1.6 million worth of rebates and facilitated 743 energy efficiency upgrades.

EnergySmart leveraged federal grant seed funding to encourage private investment in energy efficiency. Every $1 spent by EnergySmart in the form of rebates corresponds to roughly $6 invested in the community in efficiency upgrades.

On June 10, EnergySmart launched a new round of rebates that promote the purchase and installation of eligible high-efficiency equipment. Some $495,000 has been allocated for the commercial rebate program with funding made possible by Boulder County and the City of Boulder Climate Action Plan (CAP) tax. Commercial and institutional properties within Boulder County that install eligible retrofit measures between June 10 and Dec. 31, or until funds run out, are eligible.

The City and County of Denver was a sub-recipient of the aforementioned $25 million federal grant and used its roughly $4 million to create the Denver Energy Challenge. Some 1,260 local businesses have participated since 2010.

“Grant funds from the DOE will run out in August of this year,” says Program Administrator Julie Carlton. The Department of Environmental Health will continue to fund the business side of the program, which is merging into Certifiably Green Denver. 

“When we first started out, we really scaled up and targeted businesses,” Carlton says. “Obviously we won’t have these same funds.” Still, the program’s outlook is bright.

“Demand is there to reduce operating costs and also to receive recognition as a green business,” Carlton says, explaining that participating businesses can become “Certified Green” once certain criteria are met. The organization maintains a list of green businesses online for consumer use.

What’s more, Certifiably Green Denver has teamed with Elevations Credit to offer customers low-interest (starting at 3.75 percent for businesses), penalty-free energy loans. “Our loans are packaged nicely with no-cost energy advising from the Denver Energy Challenge to ensure the upgrades you choose make sense for your business,” says Residential Program Administrator Elizabeth Babcock.

Low-interest loans may be one way to offset the effects of decreased federal funds. But energy lending, like government subsidies, isn’t set in stone.

In March 2012, panel leasing company SolarCity launched the Home Energy Loan program for upgrades in residential communities and small businesses, providing up to $5,000 for qualifying applicants. The company, however, is no longer financing and self-performing upgrades. Jonathon Bass, senior director of communications, says instead “a network of partners has been created for that purpose.”

Wind, too, had been a victim of capricious federal funding. While international emerging markets like Africa and Latin America have grown, the U.S. wind industry has faced obstacles. “Uncertainty on a federal level has produced caution,” Prestiege says. “It would be nice if Congress could provide some long-term stability on tax policy.”

The wind energy’s federal Vital Production Tax Credit, which was set to expire at the end of 2012, was extended for one year to benefit participating companies. The program, supported by government grant money, will apply to projects started in 2013 but not operational until 2014 and saves 2.2 cents per kilowatt-hour of wind energy produced over the first 10 years of service.

As doubts about the extension escalated, a number of companies trimmed their work force in response to a market slowdown in wind turbine orders. However, agencies such as the DOE remain committed to Colorado, evidenced by the recent plan to expand the National Renewable Energy Laboratory’s 305-acre National Wind Technology Center just south of Boulder.