Before a panel of state lawmakers Wednesday, Xcel Energy defended its plan to dramatically cut subsidies that have made it easier for the utility’s customers to install solar panels on their roofs. Colorado solar companies say the move has effectively frozen the market and they've filed a motion asking state utility regulators to reinstate the rebates.
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Tomorrow morning Jim Burness, chief operating officer at a Denver solar company called Sol Source, expects to lay off about half of his production staff. Today he laid off his sales team. Both of which are big redundancies for a company that until this week had a staff of fifty.
"And our founder is actually seriously considering relocating the headquarters of the company out of state, and abandoning Colorado all together," Burness told the Senate Agriculture, Natural Resources and Energy Committee which was holding an informational hearing on Xcel Energy’s proposed, dramatic reduction in solar rebates.
Burness choked back tears as he turned toward the Xcel executives seated to his right.
"We don’t have beautiful briefing books," he said referring to two Xcel employees who had just given a presentation to the committee. "We’ve been struggling for the last week or two to keep ourselves alive, and it’s not going to happen," he said. "The new energy economy in Colorado is dead."
Solar Costs Drop
It was the latest dramatic moment to play out in the weeks since Xcel announced it planned to scale back its Solar Rewards Program. Months earlier, Black Hills Energy in southern Colorado announced it was doing away with its solar rebates all together.
Xcel executives have given no indication they plan to go that far.
But Karen Hide, the company’s vice president for regulatory affairs, told lawmakers the current rebates are too high. She says the average solar system used to cost upwards of $15,000, but today it’s often less than $7,000.
"The price of solar has gone about in half, tax subsidies have increased and our payment has declined but it hasn’t kept up with the market declines," Hide said.
Those market declines can be attributed to a couple of factors on the other side of the globe. Consider Germany, which has been pushing for more small-scale distributed solar energy. A corresponding ramp up of solar panel manufacturing in China has led to a small surplus in the market.
Hide says Xcel's rate-payers are now unfairly shouldering the bulk of the costs of the subsidy program.
"We have been recognized as one of the best solar programs in the country, and I understand that today people might not have that same opinion but we think we’re doing a good job," she said.
Hide says the growth and interest in the program demonstrates that it has been a success.
"We’ve been trying to responsibly manage the program, comply with the standards that are put forth by the state and to manage the money that our customers are entrusting to us for this program," she said.
Solar Markets Frozen
But Hide acknowledged it’s up to the Public Utilities Commission to study all the factors – market and otherwise – before deciding on an appropriate level for the rebates.
Eriks Brolis of the Boulder-based solar firm Namaste concedes the subsidies need to go down, but not as far and as quickly as Xcel wants.
Namaste, which was hailed in President Obama's State of the Union speech last year, expects to lay off up to 30% of its 75 staffers if Xcel’s proposal is approved as is. Brolis says the effect goes well beyond Boulder’s solar industry.
"The engineers, this is the architects, this is the lawyers that we employ, this is the accountants, this is the equipment supply shops that have increased their supply of solar goods," Brolis told the committee.
Legislative Fix
Xcel’s rebate program stemmed from the legislature’s approval of a tough renewable energy standard which includes that at least 3% of the 30% of renewable energy generated by 2020 come from distributed solar. , The issue could end up back in the legislature this session.
"Right now we have a crisis," said committee chair Gail Schwartz (D-Snowmass Village) who convened the hearing.
Schwartz says the solar industry has been a bright spot in Colorado's struggling economy.
"We can’t afford to have one job lost in Colorado, let alone the hundreds we just heard about today," Schwartz said.
The PUC takes up Xcel’s proposal and the motion by solar companies in a formal hearing Friday.
Schwartz says she’s waiting on the outcome of that to decide whether a legislative fix may be in order.
