Green Options » power purchase agreements

5 Effective Strategies for Solar Companies in a Slow Economy

Sarah Lozanova — Fri, 30 Jan 2009 21:39:22 +0000

The solar industry has taken a beating lately. At their low in November, solar stocks were down 70%. Natural gas and oil prices have plunged, reducing the value of renewable energy. Financing is scarce, making the upfront cost of solar energy a challenge.

Perhaps these conditions will encourage innovation. Here are some tactics for solar companies to weather the storm in the short-term:

Financing Renewable Energy: Feed-in Tariff (FIT) Introduced in Congress

Carol Gulyas — Sun, 06 Jul 2008 11:40:12 +0000

Representative Jay Inslee (D-WA) has introduced legislation to establish a feed-in tariff (FIT) for renewable energy. Feed-in tariffs have made Germany a solar powerhouse that employs 40,000 people in the solar industry alone, and an estimated 140,000 jobs in renewable energy. FITs have not been a topic of discussion in this country, but now that is sure to change, as the conversation shifts to ways to finance the growth of renewable energy. Renewable Energy World reports that:

“Inslee’s legislation would require utilities — at the request of any new renewable energy facility owner — to enter into a 20-year fixed-rate power purchase agreement. Uniform national “renewable energy payment” rates would be set by the Federal Energy Regulatory Commission at levels that would provide a 10% internal rate of return on investment for available commercialized technologies in regions constituting the top 30^th percentile of renewable energy resource potential in the U.S..”

In plain English, this means that if you install solar PV panels on your home, the utility has to buy the electricity you generate at a higher rate than retail, guaranteeing you a return on your investment. Extending this power purchase agreement for 20 years gives everyone — especially those who want to invest in renewables or start a small business installing solar panels — assurance of return on their investment.

New Jersey May End Solar Rebate Program to Grow Market Faster

Carol Gulyas — Wed, 25 Jun 2008 22:20:28 +0000

In New Jersey, demand for solar installations is high, but 700 customers are on waiting lists for solar rebates, and some smaller installers are laying off workers while waiting for the rebates to be funded. So the state is considering moving to a system of energy credits that can be traded on the open market, according to a story today in the New York Times. That’s because, while New Jersey has grown its solar market, now it needs to grow it even faster.

Solar must provide 2.12 percent of NJ electricity by 2020 to meet the state’s commitment, but is only providing only .07 percent thus far.
The state has paid out $170 million in rebates and 3,100 solar systems have been installed.
There is pressure to keep electricity rates from rising further, as NJ’s are some of the highest in the country, yet if rebates continue at the needed level, rates will rise even further. (Rebates are funded by surcharges on electrical rates.)

It is believed that energy credits would reward larger companies, allowing them to ramp up solar installations at a faster rate. This faster growth would also take the pressure off the state to supply rebate funds.

Image: Rob Bennett for The New York Times. Installing solar modules on the roof of Kohl’s