R.I. lags in solar incentives

(Updated, May 28, 12:41 p.m.)

Rhode Island is still waiting to experience the growth in residential solar-energy adoption that’s taken place elsewhere in the country.
For the last decade, the Ocean State has offered less in government renewable energy incentives than neighboring states, keeping down demand from homeowners for rooftop units and the size of the local solar-installation industry.
“Rhode Island is an odd case compared to most states in that it had a really robust program and then the [Gov. Donald L.] Carcieri administration eviscerated it and the industry collapsed,” said Christopher Warfel, president of Entech Engineering, a renewable energy installer and designer on Block Island. “Now it is in the process of being rebuilt, but elsewhere it is a growth industry.”
Much of the renewable energy activity happening in Rhode Island involves the R.I. Renewable Energy Fund, which for the first time last year set aside a dedicated pot of money for residential-project grants.
Paid for through charges on electricity bills and alternative compliance payments by utilities, the renewable energy fund last year helped finance 89 residential projects.
But the $500,369 that went into those projects was roughly one-third of the $1.5 million allocated for small-scale solar.
“When setting allocation, we really wanted to make sure we weren’t shutting anybody out, and we really didn’t have a good indication of the level of demand from homeowners and installers,” said Hannah Morini, program manager of the Renewable Energy Fund. “We knew that $1.5 million was probably high, but we knew it would roll over to the next year.”
Starting this year, the fund has authorized the small-scale solar program for the next three years to give the industry a greater sense of predictability and permanence.
In 2014, the program will have $800,000 to allocate, with following years depending on how much the fund takes in. To prevent subsidizing unnecessarily expensive projects, the fund changed its funding formula from paying 25 percent of the cost of each project to $1.25 per kilowatt of generating capacity.
As before, the grants are made to groups of at least three properties that are executed by the same contractor at the same time, though these properties do not necessarily have to be in the same neighborhood.
“Almost all companies active in Rhode Island use this program,” Morini said. “We just have a very small and younger industry because we have not had a consistent program. Hopefully the industry will grow as a result of multiple efforts to open creative financing solutions.”
Renewable Energy Fund grants are typically paired with federal tax credits worth 30 percent of the cost of a project. When the two incentives are combined, they usually end up paying for a little more than half the cost of a new system.
In other states, including Massachusetts and Connecticut, the federal tax credits are matched by state tax credits, something Rhode Island offered until the program was terminated in the recession.
These incentives, combined with steep declines in the cost of solar panels and other equipment, have triggered rapid growth of overall solar deployment.
According to the Solar Energy Industries Association’s 2013 Year in Review report, there were 4,751 megawatts of new solar-power systems, including residential, commercial and utility, installed nationally in 2013, a 41 percent increase from 2012. The report said the average price of a solar-electric installation has fallen 60 percent since 2011.
Among the top 10 states for new solar built in 2013, Massachusetts came in fourth with 237 megawatts added. Rhode Island was not listed.
Last month, the Renewable Energy Fund awarded $173,709 in grants to 30 residential solar projects in its first round of funding under the 2014 program rules.
One of those grants went to Warfel’s Entech Engineering for a solar-electric system on one home and solar hot water systems on five other homes. Solar-thermal systems, in which the sun’s rays heat hot water instead of being turned into electrons, is a related technology that Warfel said is underutilized locally.
“Solar thermal is an extremely viable technology by cost effectiveness and there should be a lot more of it in the state,” Warfel said. “In most places solar thermal is a close second to photovoltaic.”
Another fund grant recipient was Newport Solar, which won awards to install solar-electric units on 11 homes with a combined generating capacity of 61.15 kilowatts.
Doug Sabetti, owner of Newport Solar, said in Rhode Island financing is the biggest barrier to seeing the kind of industry growth happening in other areas of the country.
“What we are looking for is a no-money-down option where the homeowner can own the system and get the benefit of state grants and get federal tax credits,” Sabetti said.
Right now in Rhode Island home-equity loans are one option for financing solar installations and Boston-based Admirals Bank offers nonsecured loans.
Sabetti said the terms on the nonsecured loans are too steep for many homeowners, and he is waiting for solar manufacturers to begin offering new no-money-down financing plans.
An average solar-electric system in 2014 for a single-family house runs about $16,000 before government incentives.
Sabetti said including solar in new construction or large restoration projects is even more economical than adding it to existing homes, both from a pure cost and financing perspective.
At Admirals Bank’s Providence office, loan adviser Dean Charpentier said activity in renewable lending is coming almost entirely from outside the state.
“In Rhode Island the incentives are not there,” Charpentier said. •

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