Vermont's Solar Sector Scores in Bailout Bill

On October 3, Congress irked millions of taxpayers by promising $700 billion to Wall Street. But HR.1424 — the “bailout bill” — directly benefits another sector of the economy whose stock is rising: the solar-power industry.

The bill, which takes effect in January, will impact the U.S. solar industry in three ways. It extends an existing 30 percent federal investment tax credit to businesses that invest in solar projects, and gives utilities the same deal — for the next eight years. Homeowners, too, can take advantage of the 30 percent incentive, but without being limited by a prior $2000 monetary maximum on residential solar-panel installations.

The new federal incentives could be a “game changer” for Vermont residents, according to Ron French of Solar Works [1], a New England-wide company with an office in Montpelier. By lifting the $2000 cap, he explains, the feds allow homeowners to earn a $12,000 tax credit on a $40,000 domestic solar array.

The price of solar-power-generating equipment had been dropping, even before the recent federal boost. Panels are cheaper than they once were, notes French, whose company recently installed the state’s largest array [2] atop the National Life building in Montpelier. He’s more concerned about how the economy will impact solar investment. “The question is, will people still have enough money to spend on it?” he asks rhetorically.

Jim Grundy, owner and founder of Elemental Energy [3] in East Montpelier, isn’t worried. Orders have been increasing at his solar firm since 2003, when the state established its Solar & Small Wind Incentive Program [4]. If anything, Grundy predicts, the new residential incentive will prompt homeowners to purchase larger panels.

Cheryl Jenkins [5] of the Vermont Energy Investment Corporation confirms Grundy’s observations. Jenkins, who administers the Solar & Small Wind Incentive Program, says applications for her program have risen by up to 50 percent each of the last three years. The biggest obstacle facing Vermont’s solar sector, she says, is a lack of contractors.

Vermont’s green-collar workforce is growing to accommodate that demand. Industry pros say a slumping housing market frees up electricians and plumbers to install solar-panel and hot-water systems. And thanks to $110,00 in grants from the Vermont Department of Labor [6] and Entergy Nuclear [7], the Louisiana company that owns the Vermont Yankee nuclear power plant, a local electricians’ union is offering a 10-week training course in South Burlington for aspiring solar technicians.

Vermont solar-industry reps and program administrators say local businesses, utilities and homeowners expect the state to benefit from the new federal tax incentives. But they also note that Vermont must change its state funding priorities to ensure its solar sector grows in a healthy way.

The good news is that Gov. James Douglas is more “accepting” of solar energy than he is of wind power, notes Jeff Wolfe, CEO of groSolar [8], a solar installation and distribution company based in White River Junction. The bad news is, the state’s $11 million Clean Energy Development Fund [9], and the Solar & Small Wind Program it finances, doesn’t have any special incentives for schools or nonprofits, according to Jenkins of VEIC. Vermont’s 18 percent small-solar incentive rate is the lowest in the nation. And because the CEDF distributes money on an annual basis, she explains, solar contractors are wary of committing to long-term installations.

The CEDF will allocate roughly a third of its $11 million 2009 budget toward solar projects. However, since roughly $6 million of that annual budget comes from Vermont Yankee [10], it’s unclear what will happen when the aging Vernon plant’s license expires in 2012.

Last week, the Department of Public Service [11] was taking public comments about the 2-year-old fund. After conferring with experts such as David Hill [12], an energy planner with VEIC, department administrators will issue legislative recommendations about how to restructure it for the next fiscal cycle.

Hill wishes the state would do more. Sure, he says, Vermont already gets a good “bang for its buck” on its statewide incentives. But if the state established the same kind of stable, long-term funding structures for solar as it has for energy efficiency, he predicts, residents could take advantage of federal credits to make significant investments — which would, in turn, go a long way to building up the local solar industry.