OLR Research Report

November 20, 2008




By: Kevin E. McCarthy, Principal Analyst

You asked for a description of programs that could provide funding for photovoltaic (PV) or other renewable energy systems for schools and other municipal buildings.


Connecticut Innovations, Inc., (CII), which administers the state's Clean Energy Fund, has two programs that could provide such funding. The solar rebate program provides rebates to residential, governmental, and non-profit customers for PV systems with a generating capacity of up to 10 kilowatts (the amount of power used by one hundred 100-watt light bulbs). The on-site distributed generation program provides grants to non-residential customers (including municipalities) for larger renewable energy generation projects. Further information about these programs is available at

CII has also been directed to operate another program specifically targeted to promoting renewable energy systems for municipal buildings, but funding for this program has not been provided to date.


CII's solar rebate program is open to governmental agencies as well as homeowners and nonprofit organizations. The PV system must be installed by an installer approved by CII. The system must be approved before the installation begins. The PV panels must come with a 20-year warranty. The inverter (the device that converts the power from direct to alternating current) and installation must be warrantied for at least five years.

The rebate is based on the PV system's design efficiency. The installer will calculate how much electricity the PV system will produce as compared with an equivalent system under ideal conditions, based on where the system is installed and the equipment that is used. The maximum rebate applies to systems that (1) are located on sites where there is no shade from other buildings or trees, (2) have inverters that are at least 94% efficient, and (3) have PV panels that face south (plus or minus 20 degrees) that are tilted at a 35 degree angle. The installer receives the rebate, which he must pass on to the customer.

For applications that were received on or before October 27, 2008, the rebate was capped at $5.00 per watt for the first five kilowatts (kw) of generating capacity and $4.30 per watt for the next five kw of generating capacity. This rebate covered approximately half the cost of a system with a generating capacity of 10 kw. The cap has been reduced for applications received after October 27, 2008. For governmental and institutional applications the new cap is $4.75 per watt for the first 10 kw of generating capacity. For residential applications, the rebate is capped at $4 per watt for the first 5 kw and $2.50 per watt for the next 5 kw. The establishment of a new federal tax credit means that the net cost of a PV system remains approximately the same for homeowners and other customers who pay federal taxes. OLR report 2008-R-0652 provides additional information regarding the federal tax incentive.


This program is open to nonresidential customers (including municipalities) of Connecticut Light & Power and United Illuminating that plan to install qualified on-site renewable energy generation devices larger than 10 kw. The program's goals are to:

1. fund a geographically diverse portfolio of projects of various sizes fueled by a variety of renewable resources;

2. select projects that are likely to be successfully installed and operated;

3. focus on projects that fully use the technology's characteristics and maximize its benefits to the host site;

4. give special attention to projects that can reduce transmission congestion charges in Connecticut; and

5. select customers that will disseminate lessons learned, barriers overcome, and benefits of the installation to their peers.

The qualified devices include PV, wind, fuel cells, landfill gas, and waste heat recovery-powered systems, among others. For PV systems the maximum size of eligible devices is approximately 200 kw. The device must be commercially available with appropriate warranties, spare parts, and service. The project must be designed to primarily generate energy for consumption at the host site. The customer can own and operate the project or retain another party to do this. Customers can apply for a grant of up to $50,000 for feasibility studies, permitting, meteorological surveys, and other activities needed to determine whether a project is viable. Customers must demonstrate that there has been an energy audit of the host site and that they have implemented all measures recommended by the audit that will pay for themselves with energy savings within five years.

CII provides grants to subsidize the cost of approved projects. The level of support for individual projects is not a fixed amount based on size or cost, but instead varies based on the specific technology, efficiency, and economics of the project. The total available grant amount for a project is capped $4 million ($850,000 for PV projects). The grants are set at a level that allows participants to break even over the life of the project compared to purchasing the equivalent amount of power from the utility, while earning a modest return on their investment. The maximum allowable grant for for-profit owners of PV systems is $4,500 per kw ($4.5 per watt) and for not for-profit owners the maximum is $4,750 per kw ($4.75 per watt). All projects may also qualify for an additional $250 per kw grant if the site qualifies for a silver, gold, or platinum rating under the Leadership for Energy and Environmental Design green building standards.

Applications for the program are accepted on a rolling basis. CII has allocated $54.3 million for the program through 2010.


PA 07-242 requires CII, in consultation with departments of Public Utility Control, Education, and Emergency Management and Homeland Security, to establish a municipal renewable energy and efficient energy generation grant program. CII must make grants under the program to municipalities to purchase and operate (1) renewable energy sources, including solar energy, geothermal energy, and fuel cells or other energy-efficient hydrogen-fueled energy or (2) energy-efficient generation sources, including cogeneration units that are at least 65% efficient, for municipal buildings. CII must give priority to applications for grants for disaster relief centers and high schools. Each grant must make the cost of purchasing and operating the generation source competitive with the municipality's current electricity expenses. The act required CII to develop an application for these grants, which it has done.

The act authorized $50 million in bonding for the program, with the proceeds going into a separate account within the Clean Energy Fund. For FY 08 and each of the next five fiscal years, at least $10 million must go into the account. CII has requested that the State Bond Commission allocate the authorized bonding for the program, but the commission has not done so to date. As a result, the program is currently not operating.