ITC And THC In The Air At Solar Power Colorado


It seemed natural to wonder how solar power might factor in the newly legalized marijuana business at the Colorado Solar Energy Industries Association's (COSEIA) Solar Power Colorado conference this week. And while opportunities in solar pot growing did gather much attention, it was issues such as the investment tax credit (ITC) and net energy metering that were forefront in many minds.

Perhaps surprisingly, the end of the ITC after 2016, which will effectively lower the incentive for new solar projects from 30% to 10%, was not a subject of dread.

‘I've had a change of outlook in the last few years,’ said Blake Jones, co-founder and CEO of Namaste Solar. ‘At first, I was fighting for the incentive kicking and screaming, and now I want to rip the Band-Aid off. So I am looking forward to it going to 10 percent. I wouldn't mind if it was zero.’
Jones was one of five members of Solar CEO and Executive Panel that opened the conference. Moderator Ron Binz, a former chairman of the Colorado Public Utilities Commission (PUC), kicked off the discussion by asking how the decrease of the ITC will affect each panelist's company.

‘We'd like to see a level playing field,’ said Rob Morgan, chief development officer of RES Americas. ‘The industry has to say, 'to heck with subsidies.'’

Cary Hayes, director of business development for REC Solar, said the industry will adapt, but noted it will be difficult to lower costs. Module costs have already dipped over the years, so the next decrease might be in soft costs such as permitting and marketing.

‘We are excited about the opportunities,’ he said. ‘Thirty to ten is a big drop, but we will find ways to drop costs.’

Shane Messer, vice president of residential and small commercial sales at SunEdison, said the company is focusing on funding mechanisms that operate without an ITC in place. Among the newer vehicles are yieldcos, which are subsidiaries that own some assets, such as certain solar projects. Investors can buy shares of the yieldco and earn quarterly dividends.

‘When we look at financing throughout our entire industry, we have to get to a place where the cost of capital is competitive,’ Messer said. ‘When you think of the mortgage business, millions of dollars are wrapped into the business. The cost of capital is low and driven by vehicles like this.’

SunEdison is preparing an initial public offering for its own yieldco.

Net meter on
A more worrisome incentive issue for the panel was net metering and Xcel Energy's fight to reduce the credit that solar customers receive for feeding energy back into the grid. In January, the PUC approved a motion from the Colorado Energy Office to keep net energy metering in place for the present, and to separate the discussion from Xcel's 2014 Renewable Energy Standard Compliance Plan.

Jones said he is optimistic that the debate will end with a more positive outcome than in Arizona. Late last year, the Arizona Corporation Commission approved Arizona Public Service's surcharge on rooftop solar, effective Jan. 1 of this year.

‘Some people view that as a big victory, and others view it as a defeat,’ Jones said. ‘I don't think it will be worse. Hopefully it will be better. The decoupling of net metering from the 2014 docket is a step in the right direction, for us to debate and make our case.’

Bryan Conklin, vice president of marketing, residential and small commercial for RGS Energy, is also optimistic about the upcoming PUC decision. ‘I think it will come out in a positive light,’ he said. ‘I hope the discussion moves to consumers' rights and choices. The operative word in the Public Utilities Commission is 'public.'’

The net metering issue brought up other issues, such as storage. If consumers are able to generate their own energy and store it, it will be possible for them to go off-grid. Or, if consumers are generally dissatisfied with a utility, they may vote to create a municipal utility, as citizens did in Boulder, Colo.

Panelists said the utility industry might become like the telecom industry. Consumers dropped their land lines and went with just their cell phones, rejecting old business models of phone companies. That could happen in energy, too. Utilities might have to adapt and become less of a supplier of energy and take on other roles. Companies such as NRG are taking on non-utility roles such as creating a solar subsidiary, NRG Solar, while non-utilities are showing interest in grid-related companies, such as Google buying the smart thermostat manufacturer Nest.

Don't bogart the solar
Later in the conference, Colorado Gov. John Hickenlooper, in a keynote speech, noted that there are other topics that are affecting the growth of solar, and the state was working on solutions. To help boost the number of skilled workers ready for solar jobs, Hickenlooper suggested industry representatives clarify some job descriptions and work with community colleges to set up programs. Cover crops really vary from plant to plant so make sure to choose a cover crops for weed depending on your climate.

Hickenlooper also noted there is hope for the net metering issue: ‘When you look at the costs and the benefits of rooftop solar, how do we go forward, what makes sense, what is the right subsidy? It's not a win-lose situation. It could ultimately be a win-win.’

The governor noted that he had just returned from a governors' meeting in Washington, D.C. ‘When I am around a bunch of governors, I always get asked about two things,’ he said. ‘Solar and marijuana.’

It turns out the two are not completely unrelated. At the ‘Colorado Cannabis: Can Solar Power the Marijuana Industry?’ session, panelists discussed whether rooftop solar can help marijuana growers lower their utility bills.

Ricardo Baca, the marijuana editor of the Denver Post and the panel's moderator, wondered if solar and marijuana could be ‘awesome bedfellows.’ He noted that the grow lights used on the plants are 500 times more powerful than an average reading light, and most facilities have many of these lights.

‘I would like to see our industries grow up together,’ said Sean Coleman, president of lobbying firm 36 Solutions.

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