Connecticut, an easy drive from New York, New Jersey, Massachusetts, is the southernmost state in temperate, liberal New England. “Temperate” means we definitely have all four seasons here. Connecticut Winter and Spring seasons bring clouds. The Connecticut legislature makes maximum use of its modest solar resource with some dynamite incentives. Put together, the package of solar power incentives in Connecticut is enough to make some states in the sun belt look cloudy in comparison. Read on to see what’s lighting a fire under Connecticut’s solar future.
Connecticut is serious about clean energy, and has squirrelled away some dough over the years to make it happen, into the Connecticut Clean Energy Fund. Starting June of 2011, the Clean Energy Finance Authority (CEFIA) has a mandate to create 30 new megawatts of residential solar by the end of 2022.
Happy home owners can choose between a one-time solar incentive for expected performance based buy-down for their new system, or else opt for a performance based incentive over time. However, those who choose the one time incentive lose any credits they would have earned from excess energy production in the future.
Here’s why some shrewd Connecticuters have learned about future credits: the REC program is still weak. Relatively low Alternative Compliance Payments, a gift among other things to Connecticut coal, is expected to keep the value of a Connecticut REC below the $55 mark. A decent price for a REC should be in the hundreds, not $55. The long term payback option is therefore less attractive to many than the quick cash.
All in all, the Connecticut legislature makes up for the state’s cold and cloudy months with a strong and sunny encouragement for distributed PV.
Connecticut’s Renewable Portfolio Standard
Connecticut has an aggressive yet complicated renewable portfolio standard (RPS). The short version is that Connecticut utilities (both of them) must supply 23% of their power with renewable energy by January 1, 2020. None of that has to be solar, but some say 30 MW will likely be in the mix.
The longer version is how they classify renewable energy. They break it down into Class I, Class II and Class III renewable energy sources.
Class I contains our friend residential solar; mixed in with 10 other sources like wind, fuel cells, methane gas, and all kinds of ocean power. 20% out of 23% must come from Class I sources, and again that includes solar.
Class II and III stake out small percentages to guide the development of trash to energy; and combined heat and power systems, respectively.
Basically, the RPS standards that Connecticut has carved out for residential solar has been lumped together with so many substitutes that there is no driver there for residential solar.
Solar will find its way to Connecticut roof tops thanks to the State Rebate and Net Metering Laws, not the RPS, thank you very much.
To meet their RPS goals, power companies can either pay you for the renewable energy credits (RECs) you generate with your solar panels, or they have the option of making “Alternative Compliance Payments” to the state. The real bummer is you cannot accept both the payments for your RECs and the rebates available for your system.
As of 2012, the Alternative Compliance Payments are too low to justify a your switch from receiving Connecticut’s solar rebate to getting payments for your RECs. The state’s two investor owned utilities, Connecticut Light and Power (CL&P) and United Illuminating Company (CL&P) will simply continue to keep paying those lower fees instead of line your wallet.
Stay tuned for any changes in the cost of those Alternative Compliance Payments. Until then, Performance Payments, though they exist, are kind of a moot point for Connecticut homeowners.
Connecticut Electricity Prices
Connecticut may be a relatively small state, but the electricity prices sure aren’t. The average retail price for electricity was 19 cents a kWh last December 2011, compared to a national average closer to 10 cents that same month.
The Northeast has a reputation for being a bit progressive. One of the two utilities, Connecticut Light and Power, is so progressive, in fact, that it is planning to raise peak pricing (mid-day) to a whopping $1.49 per kWh in 2012; a 10:1 ratio from off peak (late at night.)
Combine 19 cent prices, insanely aggressive time of day metering with some good rebates and we would expect some savvy customers to jump ship to solar! Fortunately, there is a photovoltaic life raft for you to swim out to – one Connecticut has created for itself in the last decade.
With net metering if you generate more power than you need, you’ll get a credit on your next bill. In Connecticut, they call each extra kWh a NEG (Net Excess Generation). Those NEGs keep rolling over into the next month until the customer uses them all. The utility must pay the customer annually for every NEG that makes its way to the end of the year.
Connecticut has fantastic Net Metering Laws. All classes of renewable energy systems get net metering, up to a gigantic 2 mega-watts installed capacity. So solar homeowners here will do just fine.
All the more complicated aspects of the net metering law only apply to:
- 1) Time of day customers
- 2) Customers with huge systems (10 kW and above)
When the net metering law was passed in 1998 and amended in 2007, this credit was applicable to time of day pricing.
Time of day pricing, which some residential customers may elect to have, charges (way) more money for electricity used during the middle of the day.
This same system works heavily in your favor if you can generate electricity in the middle of the day, when the sun is shining. It remains to be seen what the legislature and the utility does with this in 2012 when time of day prices in some parts of Connecticut climb to ten-fold their off-peak rates. We can hope that time of day pricing combined with net metering makes 2012 the year of the mega-NEG!
The law gets unnecessarily complicated for systems over 10kW. For average homeowners, your system probably won’t be that large.
The state of Connecticut has net metering overkill aimed at your every stray NEG. That’s a very GOOD thing for residential PV. For a standard home PV system, getting those benefits should be very straightforward.
Connecticut has generous solar power rebates for all the PV equipment you need, up to 10 kilowatts. They offer $2450 back for every kilowatt up to a 5 kW system. For those who want more, they offer another $1250 for the next 5 kW up to and including your 10th kilowatt. They max you out after you get $18,500 back on your equipment.
It probably makes the most sense to get the solar rebate up front if you can, instead of having performance payments over time. You lose the renewable energy credits, but those won’t be worth much, not until the state stops giving utilities a better option than purchasing REC’s from you.
The first round of funding for the rebate program has 7.5 million already available, with a total of 40 million to come.
That sums it up for the solar power rebate. Be sure to follow the steps to have your Connecticut solar installation certified, and the rest should be bankable.
Connecticut has provided residents a way out of paying more property taxes for putting solar panels on their roofs since 1977, thanks to the property tax exemption. As long as you file a claim with the board of assessors before the first day of November in the applicable assessment year, none will be reassessing property taxes for said shiny new PV system. That’s a good thing! Also, your Connecticut solar installation is sales tax exempt! Another good thing.
Property-Assessed Clean Energy Financing
Connecticut is preparing to finance solar and other energy improvements for all homeowners through their local governments. The program is called the Property-Assesed Clean Energy (PACE) financing. The loan is repaid via a special assessment on the property. Nothing is in place yet, but it’s part of the June 2011 bill. Connecticut residents should contact their local governments to see when PACE financing will be available.
Example 5kW System Investment Return
Connecticut enjoys a very active and supportive legislature, making it a prime location for a home solar electric system:
- Installing a typical 5 kW system in Hartford would run about $25,000 (Don’t panic! This gets chopped down to size in a jiffy, just watch.)
- Take $12,250 off the top with the state solar rebate program, and we’re down to $12,750 for the same system! (Note: this move would be to opt out of performance payments over time, and to opt out of state RECs; neither of which we decided was worth forfeiting the cash. Perfect example of bird in hand worth two in the bush.)
- You also qualify for is the federal 30% solar tax credit, which chops $3825 out of the remaining $12,750.
- The first year in energy savings will be around $1112, since your 5kW system will generate about 5850 kwh per year. Vis a vis Connecticut power prices, that’s enough to cut $93 from your monthly power bill!
- At the existing rate of electricity price increases after the federal solar tax credit, we estimate it would take only 6 years for your solar panel system to pay for itself in Connecticut: a truly excellent accomplishment for a Northeastern state.
- Now your net cost after just one year is less than $8,000, down from over $25,000!!!
- What’s more, your home value would increase by 20 times your annual savings (about $20,000), and that’s a tax free increase!
To find out how the numbers work out for you, click here and we’ll connect you to experts we trust in Connecticut calculate realistic estimates for you based on your unique energy usage, location, shading, roof orientation, and roof type. They’ll even do it for free!
Connecticut has made the right size commitment to create a solar power market. Having the funding for solar energy was no accident. Connecticut set up the CCEF in 2000 for that aim, and started putting money away, out of everyone’s utility bill, to make that possible today. The utility rebate has 7.5 million available for today’s round of funding, with a total of 40 million coming.
Although Connecticut’s legislation around solar is nearly unassailable, there is still some room for improvement. The incentives they provide residential solar customers overlap somewhat with utility scale renewable energy applications, leaving the code more complex for home owners than it needs to be.
When it comes to performance payments, Connecticut could make them more attractive by increasing the price of the REC. If utilities didn’t have sweet Alternative Payments to turn to, they would be looking to buy them from solar powered home owners every time. To the utilities’ credit, they are looking at a steep increase for time of day use, which so far they plan on extending to each NEG, each kilowatt hour that a homeowner overproduces. That would be an appropriate reward for Connecticut’s faithful solar pioneers.
Well done Connecticut!! In the meantime, we urge you to get personalized solar quotes so you can see how the numbers pencil out for you!