You asked: (1) what is Connecticut doing to promote solar energy, particularly photovoltaics (PVs), (2) how much does it cost to install an average PV system on a home, (3) what is the payback period for such systems, and (4) what other states and countries are doing to promote PVs.

SUMMARY

In Connecticut, electric companies and competitive suppliers must obtain part of their power from renewable resources under the state's Renewable Portfolio Standard (RPS). The state's net metering law requires electric companies and suppliers to pay residential customers retail rates when the customers generate power using renewable resources. Electric companies must also offer their customers a “green option” that exceeds the RPS requirements and enter into long-term contracts with renewable energy generators. The state's Clean Energy Fund supports the development of renewable resources, including a solar PV program that is targeted at the residential sector. There are also local option property tax exemptions for renewable resources installed in residences.

The cost of residential PV system depends on several variables, including system size and how the house is oriented. The average cost of the systems in Connecticut subsidized by the Clean Energy Fund was approximately $ 8. 50 per watt. For an average size residential system (4,300 watts) the total average cost was about $ 36,500. The payback period with the rebate, ranges from under 15 to 20 years. It is important to note that the payback period will depend heavily on future electricity prices.

Many states and countries have initiatives to promote solar energy that are broadly similar to those available in Connecticut. The Database on State Incentives for Renewables and Efficiency provides information on these initiatives, including links to relevant statutes and utility commission orders and contact persons. The database is available online at http: //www. dsireusa. org/.

Some states and countries have incentives or mandates that go beyond Connecticut's. For example, Arizona offer tax credits for homeowners and businesses who install solar energy systems. California provides an on-going subsidy for non-residential customers who install PV systems (like Connecticut, California also provides a one-time rebate for residential PV systems. ) California has more rigorous RPS and net metering requirements. Florida's rebate program includes solar water heating as well as PV systems. It also has a renewable energy technologies matching grants program that is open to businesses, non-profit organizations, and governments. Ontario, Canada offers a substantial long-term subsidy to renewable energy generators, including those using PV systems. Spain requires new construction to use solar energy systems to meet part of the building's water heating needs and also provides long-term subsidies for PV systems.

As a rule, the states with the most expansive solar initiatives are those with the highest levels of insolation (solar radiation). For example, while most of Connecticut has insolation levels between 4 and 4. 5 kilowatt-hours (kwh) per square meter of solar collector per day, the range in Florida is 5 to 5. 5 kwh/m²/day. For California and Arizona, the ranges are 5 to 6 kwh/m²/day and 6 to 7 kwh/m²/day, respectively. Similarly, much of Spain averages 320 sunny days per year. On the other hand, Ontario's insolation level is well below Connecticut's.

STATE EFFORTS TO PROMOTE SOLAR ENERGY

Renewable Portfolio Standard

The law (CGS § 16-245a) requires electric companies to provide transitional standard offer service to customers who do not choose a competitive supplier. Starting in 2007, the companies will be required to provide “standard service” to small and medium customers who do not choose a competitive supplier and “last resort” service to large customers who do not choose.

Both competitive suppliers and the companies must obtain part of the power they procure for their customers from renewable resources under the state's renewable portfolio standard (RPS). They must get part of this power from “class I” resources, including solar energy. They must obtain an additional proportion of their power from “class II” resources, which include municipal solid waste and most types of biomass projects. Both proportions increase over time, totaling 10% by 2010.

Net Metering and Other Requirements for Utilities

CGS § 16-243h requires electric companies and competitive suppliers to provide a credit for power produced by residential customers in one- to four-unit buildings who generate electricity from solar energy and other class I renewable resources. It requires electric companies to install metering equipment for such customers. The equipment must measure the amount of electricity the customer consumes, the amount he produces, and the difference between these amounts. The electric company or supplier must, in effect, pay the customer its retail rate for the power he produces.

The law also requires electric companies to offer their transitional standard offer and standard service customers a “green option” in which the proportion of power coming from renewable resources exceeds the RPS. In addition, CGS § 16-244c requires electric companies to enter into contracts running at least ten years for at least 100 megawatts (a megawatt is 1,000 kilowatts) of Class I renewable capacity. The renewable energy generators selected under this program will receive a price premium of 5. 5¢ per kilowatt-hour (kwh) in addition to their costs. The selected generators must have (1) gone into operation after 2003, (2) received funding from Connecticut's Clean Energy Fund and (3) a generating capacity of at least one megawatt. Further information about this program is available at http: //www. ctcleanenergy. com/investment/Project100. html.

Clean Energy Fund

The Clean Energy Fund was established under PA 98-28, the law that restructured the electric industry to permit retail competition. The fund receives 0. 3 cents per kwh sold in the state by electric companies and competitive suppliers. The fund supports a wide range of renewable energy programs, encouraging growth in both renewable energy supply and demand. Further information about the fund's programs is available at http: //www. ctcleanenergy. com/.

The fund's Residential PV Rebate Program offers rebates for customers who install PV systems on their homes. The incentives are available only through participating installers approved by the Clean Energy Fund. Systems may be of any size but must be connected to the electric grid. The program offers an incentive of $ 5 per watt for the first 5 kilowatts (kw) of a system's installed capacity, with a maximum rebate of $ 25,000 per household. Homes can have one to four family residences.

COSTS AND PAYBACK PERIODS FOR RESIDENTIAL PV SYSTEMS

The costs and payback periods for residential PV systems depend on a wide range of variables, including:

1. the size of the system;

2. the home's orientation and the extent to which the roof is shaded during the day;

3. the price of electricity and the way that rates are designed; and

4. benefits provided by net metering, renewable energy credits, federal tax credits, and other incentives.

The average total installed cost of residential PV systems subsidized by the Clean Energy Fund is about $ 8. 50 per watt, with the average system size of 4. 3 kilowatts. The Clean Energy Fund Rebate reduces the customer's $ 36,500 cost by about half. Taking the rebate into account, the payback for residential systems ranges from 15 to 20 years. The payback period for commercial systems is shorter, averaging about 12 years.

INITIATIVES IN OTHER STATES AND COUNTRIES

Arizona

The state provides:

1. a personal income tax credit equal to 25% of the cost of installing solar or wind technologies at the taxpayer's home, capped at $ 1,000;

2. a tax credit for businesses that invest in PVs and other solar technologies, including daylighting, of 10% of the installed cost, up to $ 25,000 per building and $ 50,000 per firm;

3. a property tax exemption for active and passive solar energy systems installed in homes or businesses; and

4. a sales tax exemption for solar and wind energy systems.

The law requires that new state building projects over 6,000 square feet follow prescribed solar design standards and that solar improvements be evaluated on the basis of life-cycle costs. The requirements apply to new state office buildings, school districts, community college districts and universities. These projects must include evaluation of: (a) proper site orientation; (b) active and passive solar energy systems for space heating; (c) solar water heating; and (d) use of solar daylighting devices. Solar energy and energy conservation design, equipment, and materials must be used if the simple payback in energy savings is eight years or less. Additionally, under Executive Order 2005-5, all state-funded buildings constructed after February 11, 2005 must be designed and constructed to get at least 10% of their energy from a renewable resource. Finally, the state's Corporation Commission requires that electric utilities conduct a cost/benefit analysis to compare the cost of line extension in remote areas with the cost of installation of a stand-alone PV system.  

California

In January 2006, the California Public Utilities Commission (CPUC) adopted the California Solar Initiative to provide more than $ 3 billion in incentives for solar projects in order to provide 3,000 megawatts of solar capacity by 2017 (a typical fossil fuel power plant has a capacity of 500 megawatts). The initiative will fund PVs initially, and other solar technologies later.

The initiative will provide subsidies for smaller PV systems based on their expected capacity. The subsidy will be $ 2. 50 per watt for residential and commercial building systems (i. e. , a one-time subsidy of $ 12,500 for a 500 watt system) and $ 3. 25 per watt for systems installed in government and nonprofit buildings. For systems larger than 100 kilowatts, the subsidy is 39 cents per kilowatt-hour (kwh) for systems installed in commercial buildings and 52 cents per kwh for systems installed in governmental and non-profit buildings. This subsidy will be paid for the first five years the system is in operation, based on actual electrical output. This incentive payment will be reduced over the duration of the program in 10 steps based on the aggregate capacity of installed solar systems in the state. The program will end in 2017.

In addition, the state Energy Commission is administering a 10-year, $ 350 million program to encourage solar systems in new home construction by working with builders and developers to incorporate high levels of energy efficiency and high-performing solar systems to help create a sustainable solar market. The program will specifically target single family, low-income, and multi-family housing markets. The incentives under this program are being developed.

California's net metering law is broader than Connecticut's, in that it applies to renewable generation serving all customer classes rather than residential customers. However, utilities are not required to buy renewable power under this provision from very large renewable systems (those with capacities of more than 1,000 kilowatts).  

California's RPS is more aggressive than Connecticut's. It requires utilities to obtain 20% of their demand from renewable resources by 2017. In addition, the state's energy and public utilities commissions have set a goal of meeting the 20% target by 2010 and obtaining 33% of demand from renewable energy by 2020. In addition, the types of fuels that count under California's RPS are narrower than Connecticut's although solar energy counts under both standards.

The state exempts solar energy systems from the property tax. It exempts pipes and ducts used to carry both solar energy and energy derived from other sources at 75% of their full cash value.

Finally, California requires solar energy equipment to be installed on all existing state buildings and state parking facilities where feasible by January 1, 2007. It also requires solar energy equipment to be installed, where feasible, as part of the construction of all new state buildings and state parking facilities.

Florida

Florida's Solar Energy System Incentives Program provides financial incentives for the purchase and installation of solar energy systems from July 1, 2006, through June 20, 2010. The program provides rebates to residents, businesses, non-profits, and public facilities who purchase and install a new PV system of 2 kilowatts or larger, a solar water heating system that provides at least 50% of a building's hot water consumption, or a solar thermal pool heater.

The incentives are:

1. $ 4 per watt for PV systems, capped at $ 20,000 for residential systems and $ 100,000 for other systems;

2. $ 500 per installation of residential solar water heating systems;

3. $ 15 per 1,000 British Thermal Units, up to $ 5,000, for other solar water heating systems; and

4. $ 100 per solar pool heating systems.

The Renewable Energy Technologies Grants Program provides renewable energy matching grants for demonstration, commercialization, research, and development projects relating to renewable energy technologies. Eligible recipients include municipalities, counties, businesses, universities, utilities, and non-profit organizations. The ranking criteria for grants includes availability of matching funds, economic development potential, technical feasibility, innovation, long-term production potential, and public visibility.

The state also:

1. exempts renewable energy equipment (including PV systems) from the sales tax; and

2. provides a credit against the corporation tax equal to $ 0. 01/kWh of electricity produced by PVs and other renewable energy systems that is sold by the taxpayer to an unrelated party during a given tax year (the total amount of credits is capped at $ 5 million per year).

Ontario

Ontario's Standard Offer program offers $ 0. 11 (Canadian)/kWh to producers of wind, biomass, and small hydro energy. It offers $ 0. 42/kwh for PV energy. The term of the contracts will be 20 years, and there will be an inflation adjustment. The current residential retail price for electricity in Ontario is under $ 0. 06/kwh. There is no limit to the number of projects that may apply for a contract, but the size of each project is capped at 10 MW. The subsidy applies to projects built since 2000. Homeowners, businesses, municipalities, and other customers are eligible to participate in the program.

Spain

In 2006, the Spanish government amended the national building code to require that new and substantially renovated commercial buildings have a solar PV electric system with a capacity of at least 5 kw that is connected to the distribution grid. The law also requires that all new and substantially renovated buildings meet 30-70% of their domestic hot water demand with solar thermal energy. A description of the latter requirement (in English) is available at http: //www. solar-espana. com/solar_energy_pics/solar_energy_1/Spanish_Build_Regs. pdf.

Spanish PV generators are paid subsidized rates for the electricity they sell on the market. PV systems under 100 kW receive of 575% of the regulated tariff. As a result, these systems currently receive € 0. 40 ($ 0. 55) per kwh. Larger systems receive a tariff of 300% of the regulated tariff, i. e. € 0. 21 ($ 0. 28) per kwh. These rates remain in effect for the first 25 years, after which the fixed tariff for PV is reduced to 460% for smaller systems and 240% for larger systems.

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