Black Hills Energy working on re-launching its suspended solar program

Southern Colorado Utility looking to restart solar rebate after suspending it last yearAs Colorado solar installers wring their hands on the edges of their seats, waiting to see what Xcel Energy will do with its solar rebate program, many are drawing comparisons and warning against dramatic damages to the industry caused by Black Hills Energy’s similar suspension of its solar incentives last fall.

Black Hills Energy, which operates in Pueblo, Colo., in the southern part of the state, suspended its solar incentive program in October and has been in negotiations with solar industry leaders since then.

Black Hills director of economic development Dan Smith said he hopes to see a new plan in practice by summer 2011.

Smith said the utility and solar industry leaders and stakeholders have been meeting and working on drafting a new plan, which has reached a point where most parties seem to agree.

The new plan would include a dramatically lower and more flexible rebate along with a slightly higher and also flexible renewable-energy-credit, or REC, payment.

Smith said that Black Hills’ program in Pueblo started in 2006 with payments to residential homeowners installing solar systems receiving $4.50 per watt of installed solar.

He said $2 accounted for the rebate and $2.50 came from 20 years worth of REC payments up front.

“As [the program] picked up steam, the price of solar panels started go down,” Smith said. “We were just spending money faster than we were taking it in, so we lowered the REC payment three times between Aug., 2009 and Feb., 2010.”

The payment first dropped from $2.50 to $1.50 and then to 70 cents and then to 50 cents, Smith said.

But as the utility reduced its REC payouts, it was still obliged to pay the $2 per watt for the rebate, because changing it would have required legislative action, Smith said.

The trouble was that the contractors had a year from the time they turned in the paperwork to install the system, so the utility was committing money to pay-outs before it ever reaped any of the financial rewards from the new energy on its grid, Smith said.

In October, Black Hills finally suspended its program and hasn’t taken any applications since, Smith said.

It has been working with Colorado Solar Energy Industries Association and the Colorado Renewable Energy Society along with many solar contractors, Smith said.

The new program would shift toward a performance-based model, paying out for more energy.

It would also allow the utility some room to reduce the benefit amount as demand for the program increases, Smith said.

The proposal is still in its infancy, he said. But he hopes to see it approved by the summer.