Funding 'Completely Dries Up'

Cloudy Days For Solar Power

By Richard Martin, 10-28-08

	The sun's shining but the money isn't

Despite the passage of a big renewable-energy federal tax credit, as part of the massive financial-system bailout bill early this month, October has not been a great month for the solar power industry.

Several stock analysts have downgraded solar companies, citing the tightening of credit, the ongoing housing slide, and the reduction in demand for new solar installations. And this week Xcel Energy announced it is slashing the rebate it offers to homeowners installing new solar panels.

From $2.50 per watt for photovoltaic systems, Xcel is cutting the renewable energy credit 40%, to $1.50. That will result in the typical household solar system getting a $6750 rebate, rather than $11,250.

The justification for this cut: the more-generous solar tax credit included in the bailout package approved by Congress. Once the federal subsidies are counted, Xcel spokesman Joe Fuentes told the Daily Camera, the cost difference will be “about a wash.”

Solar company executives were quick to point out that, in fact, the federal subsidy will probably make up much less of the difference – and at any rate they won’t be available for some time, raising the upfront cost to homeowners of installing solar systems.

Not mentioned by Xcel is the fact that, also under the new federal renewable energy subsidies scheme, utilities can now take advantage of tax credits for investments in wind and solar projects. How exactly the renewable-energy industry will be affected by big utilities producing their own solar and wind energy, rather than purchasing it from other suppliers, remains to be seen.

What is clear is that the credit crunch, coupled with a global recession, is putting a serious hurt on the solar industry. Solar stocks plummeted this week after UBS analyst Stephen Chin cut his ratings on several major solar companies including SunPower Corp., of San Jose.

“Our industry research suggests the residential segment in most regions is becoming less elastic in a global recession with difficulty obtaining credit,” wrote Chin in a research note. In other words, fewer homeowners will be putting solar panels on their roofs until the recovery begins and financing gets easier – amplifying the limiting effects of the Xcel move.

Financing for renewable-energy projects has “completely dried up” in the last several weeks, Reyad Fezzani, CEO of BP’s renewable energy division, told the audience at the Dow Jones Alternative Energy Innovations conference Wednesday, as reported by Greentech Media.

Those developments could imperil the ambitious renewable-energy goals of Western states like Colorado, where Gov. Bill Ritter has pledged to cut carbon emissions by 20% by 2020.

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