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By Jeff Stanfield
Last Updated: 9/15/2011
Sources
Misc: Tucson Electric Power Co. 9/9/2011
Tucson Electric Power Co. on Sept. 13 stopped accepting new applications for residential renewable energy incentives through the end of 2011 because it has committed all of the $14.3 million it had budgeted for 2011 and has proposed to stretch the same amount of money in 2012 by lowering incentive payments.
To remedy the situation for 2012, the UniSource Energy Corp. subsidiary has asked the Arizona Corporation Commission to approve its proposal to cut in half incentives for a newly popular method of financing residential solar rooftop systems, Tucson Electric spokesman Joe Salkowski said in a Sept. 15 interview.
Under that method, solar equipment installation companies offer to lease rather than sell the solar panels and equipment to homeowners. The homeowners get reductions in energy bills and pay rent to the developers for amounts that are less than the value of the energy their rental systems generate. They do not have to pay thousands of dollars in up-front costs of installing solar equipment, and the developer gets tax breaks from building and continuing to own the systems, Salkowski said.
So far, Tucson Electric has paid $2 per watt of up-front incentive payments for residential solar equipment installations, regardless of who owns the equipment, up to a maximum capacity of 20 kW, he said.
The company proposes to spend the same amount for 2012 in total incentives but would reduce up-front incentive payments to $1.75 per watt for systems that homeowners purchase as well as cut to $1 per watt the up-front incentive payments for leased systems, Salkowski said. The proposal to deeply cut payments for leased systems was made because Tucson Electric is concerned that the popularity of the system leasing will otherwise outstrip the amount of money budgeted for the program.
In the first 12 days of September, applications for solar incentives totaled more than $3 million, three times the monthly average of $1.1 million in payment applications that Tucson Electric received for the months of January through August, he said. "We received a large number of applications for funding leased solar systems that accounted for a majority of new applications we received this month and that exhausted our incentive," he said.
Salkowski attributed at least some of the sudden increase in demand as a reaction to Tucson Electric's July 1 filing with the commission to reduce incentives in 2012. Developers wanted to get their systems under the 2011 rate before the reduction.
"That could be part of the reason why we saw so many applications for this month linked with leased systems," he said. "It has become clear to us the cost of developing leased PV systems is significantly lower than the cost of traditionally financed systems for homeowners.
"Customers are being offered leased systems at very low prices, suggesting that most of the systems' cost is being funded through subsidies provided by our customers and federal taxpayers," Salkowski said, referring to the tax breaks and utility bill charges all Arizona electric company customers pay to support renewable energy.The providers of these leased systems get tax benefits that are unavailable to homeowners who own the systems. The providers can accelerate depreciation of the systems to recover about 25% of their system costs, Salkowski said. They also can state market values for their systems — when claiming a federal tax credit — that exceed the actual costs of system they install.
"We believe those factors justify a lower incentive," he said, adding that distributed residential solar is the most expensive part of the utility's power portfolio.
Residential customers exclusively use up-front incentives, but Tucson Electric also has separately funded performance-based incentives for commercial customers with systems larger than 50 kW, for which $700,000 still remained of the $6 million budgeted in 2011, he said.
Commercial customers can take up-front incentives for smaller commercial systems up to 50 kW, but the $3.7 million funding for commercial up-front incentives in 2011 is also exhausted, Salkowski said.
Tucson Electric issued a notice to developers Sept. 9 that existing projects must be completed within 180 days for applications already submitted or else 2011 incentive reservations will be canceled. Any future incentives for such systems would be subject to a new application and funded at the level in place at that time, the notice said.
Tucson Electric said it will not start a waiting list for 2012 until after the commission has made a decision regarding the availability of incentives and funding levels.
[Notice: The emphasized section is by me. Yodrak]
By Jeff Stanfield
Last Updated: 9/15/2011
Sources
Misc: Tucson Electric Power Co. 9/9/2011
Tucson Electric Power Co. on Sept. 13 stopped accepting new applications for residential renewable energy incentives through the end of 2011 because it has committed all of the $14.3 million it had budgeted for 2011 and has proposed to stretch the same amount of money in 2012 by lowering incentive payments.
To remedy the situation for 2012, the UniSource Energy Corp. subsidiary has asked the Arizona Corporation Commission to approve its proposal to cut in half incentives for a newly popular method of financing residential solar rooftop systems, Tucson Electric spokesman Joe Salkowski said in a Sept. 15 interview.
Under that method, solar equipment installation companies offer to lease rather than sell the solar panels and equipment to homeowners. The homeowners get reductions in energy bills and pay rent to the developers for amounts that are less than the value of the energy their rental systems generate. They do not have to pay thousands of dollars in up-front costs of installing solar equipment, and the developer gets tax breaks from building and continuing to own the systems, Salkowski said.
So far, Tucson Electric has paid $2 per watt of up-front incentive payments for residential solar equipment installations, regardless of who owns the equipment, up to a maximum capacity of 20 kW, he said.
The company proposes to spend the same amount for 2012 in total incentives but would reduce up-front incentive payments to $1.75 per watt for systems that homeowners purchase as well as cut to $1 per watt the up-front incentive payments for leased systems, Salkowski said. The proposal to deeply cut payments for leased systems was made because Tucson Electric is concerned that the popularity of the system leasing will otherwise outstrip the amount of money budgeted for the program.
In the first 12 days of September, applications for solar incentives totaled more than $3 million, three times the monthly average of $1.1 million in payment applications that Tucson Electric received for the months of January through August, he said. "We received a large number of applications for funding leased solar systems that accounted for a majority of new applications we received this month and that exhausted our incentive," he said.
Salkowski attributed at least some of the sudden increase in demand as a reaction to Tucson Electric's July 1 filing with the commission to reduce incentives in 2012. Developers wanted to get their systems under the 2011 rate before the reduction.
"That could be part of the reason why we saw so many applications for this month linked with leased systems," he said. "It has become clear to us the cost of developing leased PV systems is significantly lower than the cost of traditionally financed systems for homeowners.
"Customers are being offered leased systems at very low prices, suggesting that most of the systems' cost is being funded through subsidies provided by our customers and federal taxpayers," Salkowski said, referring to the tax breaks and utility bill charges all Arizona electric company customers pay to support renewable energy.The providers of these leased systems get tax benefits that are unavailable to homeowners who own the systems. The providers can accelerate depreciation of the systems to recover about 25% of their system costs, Salkowski said. They also can state market values for their systems — when claiming a federal tax credit — that exceed the actual costs of system they install.
"We believe those factors justify a lower incentive," he said, adding that distributed residential solar is the most expensive part of the utility's power portfolio.
Residential customers exclusively use up-front incentives, but Tucson Electric also has separately funded performance-based incentives for commercial customers with systems larger than 50 kW, for which $700,000 still remained of the $6 million budgeted in 2011, he said.
Commercial customers can take up-front incentives for smaller commercial systems up to 50 kW, but the $3.7 million funding for commercial up-front incentives in 2011 is also exhausted, Salkowski said.
Tucson Electric issued a notice to developers Sept. 9 that existing projects must be completed within 180 days for applications already submitted or else 2011 incentive reservations will be canceled. Any future incentives for such systems would be subject to a new application and funded at the level in place at that time, the notice said.
Tucson Electric said it will not start a waiting list for 2012 until after the commission has made a decision regarding the availability of incentives and funding levels.
