Last year, 95 percent of SolarWrights’ income came from Rhode Island-based solar energy projects, both residential and commercial.
This year, however, the company has done virtually no work in the state.
As a result, SolarWrights is looking into moving its operations to Connecticut, where it has managed to pick up a significant amount of business due to incentives that state offers.
The Conn. Clean Energy Fund offers about $23,000 in subsidies for the average five-kilowatt photovoltaic system, whereas the R.I. Renewable Energy Fund offers zero, said Bob Chew, owner of Bristol-based SolarWrights.
As recently as last year, the Rhode Island fund subsidized as much as $25,000 of the cost of a five-kilowatt system.
But that was before the R.I. General Assembly passed the Comprehensive Energy Conservation, Efficiency and Affordability Act of 2006 in June.
Since then, funds for solar energy projects in Rhode Island have been cut by more than half, from $670,000 last year to $300,000 this year, said Andrew Dzykewicz, the governor’s chief energy adviser and head of the R.I. Office of Energy Resources.
The decision to slash solar energy incentives was driven by the new legislation, which dictates that the Renewable Energy Fund must fund projects that produce substantial amounts of energy, Dzykewicz said.
“The real bottom line is, you just don’t get that much energy out of [photovoltaic systems],” he said. According to the OER, between 2003 and 2005, Rhode Island devoted $2 million in renewable energy funds to supporting photovoltaic installations. The electrical capacity of those installations is about 91 kilowatts.
This year, the energy chief added, Gov. Donald L. Carcieri set the goal of deriving 20 percent, or 200,000 kilowatts, of Rhode Island’s energy from renewable sources. “It takes a lot of 91-kilowatt [systems] to make that up,” Dzykewicz said.
By comparison, the OER recently decided to lend $500,000 from the $2.2 million fund to a hydropower and biofuel-based steam generation project in Coventry. The project’s electrical capacity is 1,250 kilowatts.
Based on a study of the state’s capacity for wind energy, the OER has concluded that a wind energy installation could have an electrical capacity of 150,000 kilowatts, Dzykewicz said. And it would require only a $250,000 investment from the state.
But Chew argues that comparing wind and solar energies, based on kilowatt capacity versus kilowatt-hours over a 25-year period, is unfair.
When Chew contrasted the number of kilowatt-hours generated by a 1-mega-watt photovoltaic system versus the 660-kilowatt wind turbine at Portsmouth Abbey School (two systems he said were comparable), he discovered that the photovoltaic system would generate 30.3 million kWh during its 25-year lifespan versus 24 million kWh from the wind turbine, a power output difference of 26.2 percent.
But the solar system would cost $5 million before federal and state incentives. That is more than four times the wind turbine’s cost of $1.2 million before incentives. After incentives, the costs for the two systems would be $3.5 million (for solar power) versus $750,000 (for wind power).
To offset the state’s investment in incentives, however, all projects funded by the Renewable Energy Fund must generate money that will go back into the fund, creating a revolving source of investment, as mandated by the bill the Assembly passed in June.
For instance, the owner of the Coventry hydropower/biofuel project agreed to donate 2 cents per kWh, or $160,000 per year, back to the fund, Dzykewicz said. That money will repay its loan in three years and will add $160,000 to the fund each year thereafter.
“It gives us money to put into other renewable energy,” Dzykewicz said. “It could be for solar or for research.”
Chew said he had made an offer to the Office of Energy Resources to have his customers sign agreements requiring them to donate 6 cents per kWh back into the fund.
But Dzykewicz said he’s not sure that would work, because the subsidies from the renewable energy fund would come to about 18 cents per kWh for the life of a photovoltaic system. Therefore, even if the fund were given back 6 cents per kWh, it probably would never recover the other 12 cents per kWh.
That said, the question remains: Is there room in Rhode Island for solar energy?
Dzykewicz says yes. Bob Chew says no.
The OER’s new request for proposals for solar energy suggests that $200,000 of the Renewable Energy Fund could be used to subsidize commercial photovoltaic systems and $100,000 could be used for residential systems.
Furthermore, the new RFP suggest that no one company be permitted to obtain more than 50 percent of the funds, meaning SolarWrights could get a maximum of $100,000 for commercial projects and $50,000 for residential projects.
“That’s not enough to keep a part-time [solar energy] company in business,” Chew said. “We need incentives. It’s a premium product we deliver, and we’re competing against dirty forms of energy.”
The state still provides a 25-percent tax credit for residential solar energy systems, he said. And the federal government provides a 30-percent tax credit, which helps. But it isn’t enough.
“Hundreds of customers want systems in Rhode Island,” Chew said. “We basically say, ‘We’ll take your number and get back to you.’ ”
Last year, SolarWrights monopolized the solar industry in Rhode Island. Chew estimates the company installed at least 98 percent of the photovoltaic systems in the state. The company also topped Providence Business News’ 2006 list of fastest-growing companies.
Now the only people who can afford to install photovoltaic systems on their homes or businesses are those who have disposable income, Chew said – or those who are willing to take the risk, out of concern for the environment.
The company would like to stay in Rhode Island, Chew said, but unless the conditions change, that’s unlikely.
