Xcel said the reductions are justified because the cost of solar panels has been declining and customers no longer need higher incentives to offset installation costs.
But solar-industry officials said the cutbacks will have a severe effect on investments and jobs in the sector.
"This is absolutely devastating to the solar industry," said Neal Lurie, executive director of the Colorado Solar Energy Industries Association. "No industry can survive this kind of shock."
Lurie said the subsidy cutback endangers the sector's growth, which has seen Colorado solar-energy jobs increase from 500 to 5,300 since the incentive program started in 2006.
State law provides for incentives and rebates on the installation of solar-energy equipment to meet renewable-energy mandates. The law allows Xcel to establish the level of incentives; the amount of rebates is set separately by the Colorado Public Utilities Commission.
The combined incentive and rebate drops from $2.35 per watt to $2.01, effective immediately, based on Xcel's change for residential- scale systems that range from 0.5 to 10 kilowatts. Larger systems will incur similar reductions.
Xcel also is asking the PUC to lower rebate amounts so that combined subsidies would drop further to $1.25 per watt — a 47 percent reduction from previous levels.
Solar-industry officials estimated that typical residential systems now costing $5,000 to $12,000 could rise to $8,000 to $16,000 after the reduced incentives and rebates.
Customers whose incentive applications already have been approved will still qualify for the higher subsidies.
Xcel cited a Deutsche Bank study saying the cost of solar panels dropped 50 percent from 2008 to 2009.
"We look forward to the industry's continued progress so that it can ultimately become self-supporting," Xcel Colorado president David Eves said in a statement. "Just as wind energy is now more competitive, solar energy is moving in that direction too."
SOURCE: http://www.denverpost.com/business/ci_17407964
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