Thursday, October 23, 2008

Solar: Booming Colorado PhotoVoltaic Market May Soon Bust

From RenewableEnergyWorld:

Although the rapid growth of Colorado's PV industry has been among the country's best PV success stories, the state's industry now faces extreme uncertainty in 2009 and there is the potential for significant market retraction and resulting loss of jobs.

First, a little history....

...Why Is the Market About To Bust?

While 2006 to 2008 has been successful beyond previous expectations, the future of Colorado's PV market currently hangs in the balance. Xcel Energy is planning only 12 MW in 2009, a 33% market contraction over 2008, with further contractions again in 2010 (8.5 MW) and 2011 (3 MW). As a result of this drastic reduction in market size, one can expect that critically important jobs, businesses, investment and momentum will all be lost. Regressing in this manner and losing the valuable infrastructure that has been created over the past 3 years will seriously undermine Colorado's participation in future PV industry success, especially considering that the rest of the world will see ongoing market growth of 40% per year or more.

Why is Colorado set to retreat in the opposite direction? One reason is that, because of the design of the RES, Xcel Energy is able to accumulate SO-RECs in advance of RES milestones, thereby allowing Xcel to leverage federal Investment Tax Credit (ITC) dollars and maximize PV installations before the ITCs expired. As soon as a utility meets its RES requirements, it no longer needs to offer the same incentive levels, and if incentive levels go down, so does consumer demand. While one could argue that there were merits to Xcel's plan to leverage the then-expiring ITCs, the disadvantages far outweigh the benefits to the people of Colorado when considering the resulting loss of jobs, businesses, and industry infrastructure.

Even the recent 8-year extension of the ITCs will unfortunately have minimal impact on the growth of Colorado's PV market unless adjustments are also made at the state level. If the RES targets remain unchanged, for example, the ITCs will simply allow utilities to offer lower incentive levels in order to accomplish the same solar goals. That being said, the ITCs are still a tremendously positive development that will facilitate efforts to make changes at the state level because, among other things, less funding would be required in order to spur additional market growth....MORE