August 19, 2008
CLEAN ENERGY FUND SOLAR PROGRAMS
By: Kevin E. McCarthy, Principal Analyst
You asked (1) what is the financial condition of the state's Clean Energy Fund, particularly with regard to its solar programs and (2) has the fund's administrator considered reducing the 50% rebate it provides for homeowners installing solar photovoltaic (PV) systems in order to spread out its funding.
The Clean Energy Fund operates a number of programs to promote solar and other renewable energy resources. The fund is administered by Connecticut Innovations Inc. (CII), a quasi-public agency. It is supported by a charge of 0.1 cents per kilowatt-hour of electricity sold in the state. In 2007, the fund had revenues of just under $27 million and expenditures and expenses of approximately $14.6 million. The fund's current balance is $88.9 million. CII allocated $55.4 for commercial PV installations, of which $12.1 million is currently available. It has allocated $15.9 million for governmental/nonprofit organization PV installations, of which $5 million is currently available. Finally, it has allocated $17 million for residential PV installations, of which $2.7 is currently available.
The fund provides a rebate of up to 50% for smaller residential PV systems and a smaller proportion for larger systems. For residential systems with a capacity of five kilowatts (KW) or less, the maximum rebate is $5 per KW. Larger residential systems receive a rebate of up to $4.30 for the next five KW. The typical residential system funded in 2008 has a capacity of 6.8 KW. The actual amount of the rebate depends on the system's efficiency, whether the building is oriented in a way to best take advantage of the sun, and the extent to which the system is shaded during the course of a year.
Even with the rebate, it typically takes ten to 12 years for a residential PV system to pay for itself through lower electric bills according to CII staff. As a result, while the staff monitors the costs of PV systems, they believe the current rebate level is needed to encourage people to install PV systems. CII has begun developing a program for leasing PV systems as an alternative to the rebate program, and has allocated $15.2 million for this program.