Representatives in Minnesota's solar industry say a change to one of Xcel Energy's incentive programs could hurt the industry just as takes hold.
By the end of 2013, Xcel Energy plans to end most rebates to home and business owners who install solar panels. Xcel officials say the move makes sense for several reasons, including the fact that solar panels are less expensive than they used to be.
Jon Kramer, CEO of Minneapolis-based Sundial Solar, spends a lot of time crawling around on roofs installing solar panels. The company has around a dozen employees who take on about 100 jobs annually.
"We do everything. Homes, businesses, cabins, garage, you know, boats," Kramer said.
He says the Twin Cities are a good place for solar energy. The region gets more sun than Jacksonville, Florida and Houston, Texas. Kramer said Xcel Energy's Solar Rewards program has been a boon for business.
"Prior to three years ago when they instituted this program most of my business was in California, and in Florida and in Colorado," Kramer said. "But now I'd say 95 percent of my business is here in Minnesota."
The program began in 2010 and gives rebates upfront to homeowners and businesses that install solar panels. The program provides an industry incentive and brings down the costs. The savings can amount of thousands of dollars.
But Xcel is making changes. The company says the program has met its goal to add six megawatts of solar energy to the system - roughly enough to power 1,500 homes. The company plans to roll back rebates next year and ultimately end the program by 2014.
The state requires Xcel generate 30 percent of its energy supply from renewable sources by 2020. The mandate requires 25 percent come from wind and the remaining 5 percent from wind or other sources. Currently, the company says it is on target to meet those goals.
Kramer said when the Solar Rewards program goes away it might not wipe out the state's solar industry, but it will be a significant blow.
"If the Solar Rewards program goes away and the incentives all go away, most of my business will be going away here in the state. I'll be working elsewhere; might even have to move my business," Kramer said.
Officials with Xcel acknowledge the number of solar installations in the state will probably decrease.
The company has spent $15 million on about 560 solar projects in the state, said Laura McCarten, regional vice president for Xcel Energy.
"Without that level of subsidy from solar rewards, I do expect there would be fewer projects if they continue to rely on needing incentives or rebates to make sense," McCarten said.
The company announced the decision in a filing with the state's Public Utilities Commission in June.
Excel is ending the program because the cost for solar panels has come down in recent years, McCarten said. There are other factors as well, she said, such as customers are not demanding more energy.
"And finally ... the cost of the solar rewards program is actually part of customers' rates — customers are paying for these incentives," McCarten said. "And we're facing a lot of investments needed in the system."
As the utility company phases out the solar rewards program, it is shifting focus towards energy conservation programs.
Solar advocates say it makes sense to reduce incentives over time, but Xcel is moving too fast.
Lynn Hinkle, policy director for the Minnesota Solar Energy Industries Association, said the Department of Energy estimates solar will be cost competitive by 2015 or 2016.
"There's a gap. If Xcel eliminates the solar rewards program by 2014 there's a year- to two-years gap there that needs to be filled by something," Hinkle said.
Xcel plans to keep a made in Minnesota rebate program for customers who purchase solar panels from one of the state's two solar panel manufacturers. There's also a 30 percent federal tax credit that runs through 2016 that can be applied to solar installations.