The Colorado Public Utilities Commission on Monday approved a new two-year plan for rooftop and community solar installations in a move to offer more stability to the market.
The solar blueprint — part of Xcel Energy’s renewable energy compliance plan — provides for at least 42 megawatts of projects annually for 2015 and 2016.
“One of the things we’ve heard loud and clear from the solar industry is that it needs continuity,” said PUC Chairman Josh Epel.
The solar industry has been sparring for years with Xcel, the state’s largest electricity provider, over its Solar Rewards program.
Xcel has sought to reduce the incentives to homes and small businesses and has proposed lower allocations than called for by the industry.
Several times the megawatt allocation has been exhausted in a few months, causing installers to cut back operations.
The industry has called this the “solar coaster.”
The new plan gives the solar industry continuity while also providing some certainty to Xcel by capping the capacity, Epel said.
“We are very encouraged that this gives the industry a chance to plan for the future,” said Rebecca Cantwell, executive director of the Colorado Solar Energy Industries Association, a trade group.
Xcel said in a statement that it “will review the commission’s written order and respond accordingly.”
Under the plan there will be 24 megawatts a year of small rooftop solar installations of less than 25 kilowatts, according to the PUC staff.
There also will be 12 megawatts of medium-size projects of 25 to 500 kilowatts, which are primarily installed on small businesses.
The 48 megawatts of small systems is equal to 8,571 residential installations over two years — a roughly 45 percent increase in installed solar, Epel said.
The plan also allows for between 6.5 megawatts and 30 megawatts of community solar garden projects — larger facilities in which people can buy shares.
“Greater clarity on the ruling is needed as the range of 6 to 30 MW is left open-ended and Xcel pushed for the low amount of 6 MW in their filings,” Tom Hunt, director of research for Clean Energy Collective, the state’s largest solar garden builder, said in an e-mail.
“We are confident this will be resolved,” Hunt said.
Xcel had proposed just one year of projects totalling 42.5 megawatts.
Under the state’s renewable energy standard, Xcel must provide 30 percent of its electricity through renewable sources by 2020.
In this year’s compliance report, Xcel said it is on pace to meet the goal and has more than enough renewable energy credits to meet the interim targets.
Still, the utility commissioners said they supported a longer-term program to provide stability to the solar market — particularly because the price of solar installations is falling.
This is a “new phase,” commissioner Pam Patton said.
“The commission recognized that we have met compliance with the Renewable Energy Standard statute and that the approved incremental acquisitions are above amounts required for compliance,” Xcel said in a statement.
Since 2006, Xcel’s Solar Rewards program has installed 19,800 photovoltaic systems, totaling 200 megawatts, according to the company.
It has paid more than $297 million in incentives.
But the fund that financed Solar Rewards — raised by a 2 percent charge on customer electric bills — ran into a $69 million deficit by 2013.
To reduce the deficit, the PUC supported a reduced program in 2013. But the PUC staff noted that the renewable energy account is forecast to end 2014 with a $1.5 million surplus.
Xcel proposed reducing, in steps, the credit for each kilowatt-hour a customer-owned solar system generates from 2 cents to a fraction of a penny.
The PUC instead set flat rates for the credit of 2 cents a kilowatt-hour for customer-owned systems, 1 cent for leased systems and 5 cents for medium-size systems.
The plan also includes 20 megawatts a year of industrial-scale recycled energy projects. These are facilities that capture heat or pressure from industrial operations and turn them into electricity.
A company installing a recycling energy operation would be eligible for a credit of $500 for each kilowatt generation installed paid over for 10 years.
“This is new type of technology — just as wind and solar were a few years ago — and needs to be encouraged,” said Erin Overturf, an attorney with the environmental group Western Resource Advocates.
Editor notes: The terms of the credit for $500 for companies installing a recycling energy operation was updated on November 26, 2014
