A state solar energy program has slashed financial incentives as a backlog of applications grows and costs plunge.
Beginning Monday, the Green Energy Fund for Delmarva Power customers will see new solar incentives, the DNREC’s Division of Energy & Climate announced on Friday.
This comes as major solar installers offer lease deals with no upfront costs. Solar panel and related costs have also declined, leading some critics to claim that incentives are no longer needed.
In addition, there is a federal tax credit that could expire next year.
In addition to financial incentives, utilities buy excess solar power that goes into the grid.
The Green Energy Fund provides grants to Delmarva customers for small scale solar and geothermal installations.
All applications received on or after Sept. 21 will be reviewed under the new incentive levels. The Delaware Electric Cooperative’s Renewable Resource Program and the Delaware Municipal Electric Company programs are not affected by this announcement.
“Rebate levels for the DPL Green Energy Fund program are being lowered due to a significant increase in applications, the lower cost of materials in the solar market and an increase in leased systems which do not need large incentives to make them economically feasible,” said Energy Program Administrator Robert Underwood, Division of Energy & Climate. “These lowered rebate levels will still support systems that are economically feasible for homeowners, solar power purchase models and lease companies.”
The Division of Energy & Climate has seen a dramatic increase in Green Energy Fund applications. That is due to solar energy players moving into the market and offering “rooftop rental” deals with no up-front costs.
In 2013 the Green Energy Fund (GEF) received 284 applications, and in 2014 the number doubled to 571. For 2015, approximately 1,300 applications are projected.
More than 80 percent of the applications received this year are under the newer PPA/lease financing model, which requires no money down on the part of the lessee.
The recent rapid growth in solar power installations, changing industry economics and limited funding have led to a 200 percent increase in applications and an unsustainable backlog of up to 36 months in grant disbursements, a DNREC release stated.
The new GEF solar incentive levels are based on market conditions and recommendations from the Green Energy Fund Review and Recommendations Final Report conducted by the Vermont Energy Investment Corporation (VEIC).
The incentive levels are being reduced from a maximum of $15,000 for residential solar system to $3,300 for customer-owned systems and $1,000 for PPA/Lease systems.
In addition, non-residential solar systems are being reduced from a maximum of $24,000 to $3,000. Non-profit solar systems are being reduced from a maximum of $50,000 to $41,250.
“We understand that the changes in incentives will affect the solar energy business in the short term, but not addressing the backlog would be far more harmful,” Underwood added. “We look forward to working with stakeholders to assist with this transition of the Green Energy Fund.”
For more information on the incentives, visit http://www.dnrec.delaware.gov/energy/services/GreenEnergy/Pages/GEPDelmarva_F.aspx
