December 21, 2015

Bright Future: Solar positioning for residential ramp up

PHOTO | Pablo Robles
PHOTO | Pablo Robles
Erik Anderson, sales manager at CED Greentech East, is surrounded by stacks of solar panels and racking at his company's new, larger Enfield facility.
PHOTOs | Contributed
Employees of Bloomfield’s C-Tec Solar, which hopes to hire significantly in 2016, install solar panels on an area home. Above is Aaron Loitz.

Connecticut's burgeoning solar industry is gearing up for nearly a decade of growth following lawmakers' decision this year to expand the state's pool of residential solar incentives.

The financial perks, which have totaled more than $70 million since their 2012 launch, so far have spurred 107 megawatts of solar installations on more than 14,000 homes. Now, the state has expanded the goal to 300 megawatts and installers say many more homeowners are primed to use the renewable energy source.

"While the [residential solar incentives] programs have been very good, we've just scratched the surface here," said Michael Trahan, executive director of industry association Solar Connecticut, who thinks the legislation will create several hundred direct jobs in the state.

There's already evidence the industry is positioning itself for growth.

California-based SolarCity, which has been the state's most prolific residential installer, opened its second Connecticut facility in Milford last month. The company, which opened its Rocky Hill plant in late 2012, has grown to nearly 300 employees, and expects to add another 100 workers as a result of the Milford expansion.

C-Tec Solar in Bloomfield hopes to hire heavily in the year ahead, its president said recently, and CED Greentech East — one of the state's largest solar-parts distributors — is moving from its longtime 30,000-square-foot South Windsor headquarters to a 70,000-square-foot facility in Enfield.

Erik Anderson, CED's sales manager, which has a growing staff of 60 full-timers, part-timers and temps, said the company needs more room to store workers, panels and racking.

"Our distribution business over the last three years has more than doubled [each year]," Anderson said. "Triple-digit growth for several years."

Incentives' goal: industry self-sufficiency

In June, the legislature voted to extend residential solar incentives through 2022, or until the 300-megawatt threshold is hit — whichever comes first.

Trahan said the incentives extension provides some certainty to solar installers and others who support the industry.

It also promises to increase the amount of renewable energy produced in Connecticut, helping the state reach its "renewable portfolio standard" goals, which require utilities and suppliers to obtain 20 percent of their retail electricity from renewable sources — including solar — by 2020.

The requirement for this year was 12.5 percent. Despite that, only 5 percent of the renewable energy credits purchased by Connecticut suppliers were actually produced in the state, the Public Utilities Regulatory Authority said in January.

The home solar incentives, managed by the quasi-public Connecticut Green Bank, have and will continue to be funded by part of a charge on ratepayers' utility bills.

But that revenue stream alone wouldn't be enough to expand to 300 megawatts of solar, said Matt Macunas, the Green Bank's legislative liaison and marketing manager.

To supplement it, the legislature also authorized the creation of solar home renewable energy credits, or SHRECs, which will be generated by home solar installations and owned by the Green Bank. Eversource and United Illuminating will be required to purchase the SHRECs from the Green Bank under a 15-year agreement, which will help fund the continuation of incentives for installers and homeowners.

Though SHRECs expand the pool of money for the incentives and create more work for installers, there won't be any significant change to the financial value of the incentives for a given project.

In fact, solar incentives have been declining on a set schedule since the legislature created them three years ago, which is meant to encourage the industry to support itself without government aid.

So far this year, average incentives have hovered between $4,800 and $5,800 per installation, down from between $11,300 and $13,900 in the first year of the program, according to Green Bank data.

The incentives are typically paid to contractors and solar system owners to bring down the overall price of a given project.

"The incentives have been going down and solar has still grown," said Mickey Toro, president of C-Tec Solar, which installs residential and commercial solar here and in Massachusetts. "It won't hurt the model to have them go down slowly."

A variety of other factors help offset the lower state incentive. A federal tax credit, which expires at the end of 2016, covers 30 percent of a solar installation's cost, which in Connecticut averages in the low $30,000 range, before incentives. [Editor's note: After this story went to press Dec.17, Congress extended the federal solar credit through 2020.]

Falling material prices and Connecticut's high electricity costs also help, Toro said.

Toro, who oversees about 40 full-time employees, said he hopes to hire as many 100 more next year. Part of that is driven by the continuation of the residential business in Connecticut, where C-Tec has installed more than 700 systems backed by state incentives — the fourth highest amount in the program.

"C-Tec feels like it's in a marketplace that allows for aggressive growth," Toro said.

Permitting costs vary widely

Not everything is running efficiently. One thing that's holding back solar growth, installers say, is local permitting.

It's long been a gripe, though more towns have gotten used to solar applicants as more projects have happened.

Of all the builders and contractors who frequent town building departments for required permits and approvals, solar installers argue they're unique because they handle high volumes of work and work statewide.

"Installers in Connecticut will go to the edge of the state, every corner, to install a system," Trahan said. But installers say their town-hall experiences vary. Some towns waive permit fees entirely, but many others charge fees, either at a flat rate or as a percentage of the cost to install the system.

The average Connecticut fee this year has been around $400, though in several towns, fees have exceeded $800, according to Green Bank data.

And while installers have pushed to lower those fees — a recent attempt at a $200 cap failed in the legislature — it's the length of time it takes to get permits in some communities and the procedural differences from town to town that irk installers.

State law requires municipalities to approve or deny permits within 30 days. Installers want a stricter requirement.

The solar bill this summer also included a provision that requires all towns to incorporate solar into their building-permit processes, though installers, who pushed for uniform online permits, argue that most towns have permitted some solar projects at this point anyway.

The Green Bank has held training sessions for town building inspectors and other officials in anticipation of the industry's continued growth.

Trahan understands that some towns might be overwhelmed, but he said the local permitting process adds to installers' soft costs, and ultimately, the price customers pay.

"If you're going to get the price of solar down further, you've got to find a way to cut costs," said Trahan, who added that his organization will continue to press the legislature for a more streamlined local permitting system and other measures to ease installation delays and costs.

Brendan Reed, deputy director of policy and electricity markets for SolarCity, said a slower process can also ebb customers' enthusiasm.

"They sign a contract and it's a big production," Reed said. "Then they sit around and wait for a few months until they have panels on the roof."

Yale's Environmental Performance Index said in August that it had partnered with the Green Bank to produce a town-by-town solar scorecard. It plans to publish the results next year.

The other major factor in how long a solar project can take is grid interconnection approvals from the utility company, which in Connecticut include Eversource and United Illuminating.

State incentives for residential solar only apply to systems that are connected to the grid, through a process called net metering.

Like towns, the electric distribution companies are also receiving higher volumes of solar applications.

But a study released last summer by EQ Research, which focuses on the clean-energy sector, found that Eversource averaged just five days for interconnection applications last year, the lowest of the 34 utilities in 13 states.

Interconnections took more than 30 days for 11 of the utilities. EQ surveyed installers for the study, which did not include United Illuminating

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