TEP seeks to reduce incentives for solar
Posted By Admin on August 30, 2011
Tucsons solar-energy buildout will accelerate next year, as
Tucson Electric Power Co. focuses on bringing more big,
utility-scale solar projects online.
But a proposal by TEP to significantly cut funding for
solar-energy systems installed by commercial customers has raised
concerns among local solar installers.
The Arizona Corporation Commission plans to air the
commercial-solar issue during its regular open meeting this
week.
TEP has proposed spending $44 million in ratepayer money on
solar and other renewable-energy generating projects next year, up
from about $36 million this year. The 2012 amount includes about $5
million in funds carried over from 2010.
The overall budget for upfront incentives paid for residential
renewable-energy systems, such as rooftop photovoltaics, would
remain at about $14.4 million.
The incentive rate for such home systems would fall to $1.75 per
watt from $2 per watt currently. That amount would decrease to
$1.50 per watt if TEP reaches a trigger goal of 60 percent of its
overall generating capacity for such systems by mid-year.
Upfront incentive payments for commercial systems would remain
unchanged, at $1.50 per watt up to the 60-percent trigger point,
and $1.25 per watt thereafter.
But TEPs plan calls for cutting the budget by 70 percent, to
$1.1 million next year from $3.7 million this year, for upfront
incentives paid out to commercial customers. Such upfront
incentives are limited to systems with generating capacities of up
to 50 kilowatts.
And the utility plans to reduce the amount of performance-based
subsidies for larger commercial systems, which are paid out
incrementally over 20 years.
Solar industry officials say the move by TEP – and more drastic
cuts proposed by the states largest utility, Arizona Public
Service Co. – would halt the momentum of such installations and
deal a significant financial blow to the local industry.
With those kinds of decreases, its really hard for the
industry to plan and grow, said Lon Huber, government-affairs
representative for the Tucson Green Chamber of Commerce and the
Tucson-based solar installation firm Technicians for
Sustainability.
Huber said TEPs plan would provide only anemic support for
commercial solar, though TEPs future forecast shows that segment
ramping back up in 2016 as the renewables standard rises.
Another local solar industry executive said significantly
dropping support for commercial solar seems shortsighted.
When theyre trying to fulfill their mandate, it doesnt seem
to me its in the interest of the whole spirit of it to put the
kibosh on commercial (development), said Charlie ODowd, president
of Abco/Westcap Solar.
A TEP spokesman said the utility actually doesnt need any more
commercial solar installations next year to reach mandated levels
of renewable-energy generation.
The states Renewable Energy Standard next year requires
state-regulated utilities to derive power equal to 3.5 percent of
their retail sales from renewables, ramping up by a half-percent
annually to 15 percent by 2025.
Under the rules, utilities must get 30 percent of the required
renewable generating capacity from so-called distributed
generation sources – customer-sited installations like rooftop
photovoltaics.
Half of the distributed-generation goal must be met with
residential installations and half must be commercial.
Until 2010, we were having great success with commercial
systems while residential was lagging, TEP spokesman Joe Salkowski
said. Now residential is performing well, and were ahead of the
curve on commercial.
Other factors come into play, Salkowski said.
TEP has improved its ability to predict which projects will
likely secure financing and be built, eliminating the need to
over-budget for such systems with the expectation that some
reserved credits would go unused, he said.
TEP is forecasting lower retail sales in the next few years
because of the sagging economy, which would reduce the required
amount of renewable-energy it must generate, Salkowski said.
In addition, under the rules TEP can use wholesale generating
credits to meet the commercial distributed-generation
requirement.
For example, TEP is now buying power from a 2-megawatt
commercial concentrating photovoltaic system, erected by Amonix
Inc. at the University of Arizona Science and Technology Park, that
can be counted toward the commercial requirement.
We have made an effort in our 2012 plan to maintain a level of
commercial incentive funding that would support ongoing development
in that area, Salkowski said. It would be possible for us to use
wholesale credits to a greater degree than we have proposed, and
eliminate the non-residential program.
ODowd questioned why TEP would reduce commercial solar
incentives while the market is robust, only to increase them again
down the road.
Salkowksi said that, with solar installation costs dropping,
ratepayers are likely to get more bang for their bucks by adding
capacity in future years.
Its a balancing act, because this is our customers money, so
it is our job to make sure we dont overpay for the solar
capacity, Salkowski said.
By the numbers
25
Megawatts of solar generating capacity TEP has connected to its
system
4,000
Number of typical TEP homes for which solar capacity can meet
annual power needs
200+
Megawatts of solar capacity expected by 2014
32,000
Number of typical TEP homes for which solar capacity can meet
annual power needs by 2014
YOUR MONEY
Tucson Electric Power has proposed increases in monthly customer
surcharges that fund incentives for renewable-energy projects,
which are based on power usage and capped by customer class.
For residential customers, the surcharge cap would rise to $5
per month, up from $4.50. TEP has estimated that the typical
residential customer is paying about $3.60 per month this year.
The cap for small business customers would rise to $178 per
month from $160, while the cap for large commercial customers would
increase to $1,110 from $1,000 this year.
Contact Assistant Business Editor David Wichner at
dwichner@azstarnet.com or 573-4181.
Comments