In the past year, Connecticut companies soared to new heights selling and installing solar energy systems, and the future shines bright.
Except in Connecticut.
Buoyed by the state’s early commitment to solar energy, the number of installers and manufacturers boomed in Connecticut in early 2000s. But the loss of the government’s incentive program coupled with the Legislature’s inability to keep up with programs offered by other states is sending these young companies outside Connecticut’s borders to find work.
This leads industry leaders to believe the early advantage Connecticut once enjoyed in solar renewable is eroding and many of these companies will exit for more fertile ground.
But the state still has time. The Connecticut Clean Energy Fund submitted a new two-year budget this month that would once again provide incentives to build solar photovoltaic installations, starting in October. Also, the Connecticut General Assembly is expected to give high priority to creating an energy credit program — similar to those in solar progress states, such as New Jersey — when it convenes in January.
“There continues to be demand for commercial installations, but they are playing the waiting game,” said Michael Trahan, executive director for the industry group Solar Connecticut, Inc.
The Clean Energy incentive program is key to getting commercial installers back to work in the state, Trahan said, although he would prefer the state to double the proposed two-year budget of $8.9 million. For Connecticut to truly catch up compared to other states, it needs to develop a solar credit program.
No companies with a substantial role in the solar industry have left the state, yet, but Connecticut solar companies export their work.
In its second quarter Aug. 11, Enfield solar parts manufacturing STR Holdings reported more than doubling its solar net sales compared to last year, an indication that demand for solar products is on the rise. China-based manufacturer LDK Solar reported similar results.
On the strength of the growing market, STR will expand its Connecticut manufacturing operations to a new 275,000 sq. ft. facility in East Windsor. The company’s net income for the first six months of 2010 is $22.8 million, equal to its net income for all of 2009.
Europe, particularly Germany and Italy, is a major part of STR’s solar sales business, CEO Jim Jilot said in the second quarter statement.
The manufacturing gains in Connecticut pale in comparison to other states with better solar incentive program, Trahan said. Massachusetts has several companies similar to STR, such as Evergreen Solar and the Spire Corp.
Connecticut solar installers have enough commercial projects to last through the fall, and then the state will be out of work, Trahan said. The lack of any state incentive program stops all commercial solar projects.
“The solar industry is booming, just not here,” said Mike Silvestrini, president and co-owner of Green Skies Renewable Energy in Middletown.
In 2009, Green Skies installed 100 kilowatts of solar photovoltaic projects, both in Connecticut and other states. In the first six months of 2010, the company installed 5 megawatts of solar, a 5,000-percent increase. That number could double to 10 megawatts by the end of the year, but all of that work is outside Connecticut except for one small project.
New Jersey is the dominant market now, along with Massachusetts and New York. Pennsylvania and Maryland are emerging. Green Skies may relocate from its Middletown location to be closer to these markets, Silvestrini said, although the move could be in-state.
The advantage states such as New Jersey have is their solar renewable energy credit programs. In addition to incentive programs to pay for photovoltaic installation construction — which the Connecticut Clean Energy Fund used to provide before the funds ran dry in January — credit programs pay the installers extra for every kilowatt hour of green energy produced.
Because of these programs, the time for a New Jersey solar project’s energy savings to offset the costs is five years. In Connecticut, the payback period is 20 years.
With the faster return, venture capital firms and Wall Street banks invest in large-scale projects in these states, Silvestrini said. Nobody invests in Connecticut solar projects
“When we dream up large-scale solar energy projects, it means the financiers what us to go to friendly states that are supportive of these installations,” Silvestrini said.
The past two legislative sessions, the Connecticut General Assembly tried to create a solar renewable energy credit program. In 2009, the measure passed the House of Representatives, but not the state Senate.
This year, the credit program passed the Legislature as part of a larger energy bill meant to cut the state’s high electricity prices, but the measure was vetoed by Gov. M. Jodi Rell, who is finishing her final term. While voicing support for the solar incentives, Rell said she vetoed the bill because she didn’t like other non-solar provisions in the legislation.
State Sen. John Fonfara (D-Hartford) said the energy measure will be the first bill considered in the 2011 legislative session starting in January. The co-author of the 2010 energy bill, Fonfara said he and the other supporters will take the time to craft legislation that is powerful and acceptable.
“We don’t want a bill that is going to be controversial,” Fonfara said. “Hopefully, the new governor will work with us and be supportive of the legislation.”
Even before that credit program is considered, the Connecticut Clean Energy Fund wants to resume the solar incentive program to pay for portions of photovoltaic installation, said Christin Cifaldi, project manager for the fund.
Of the 213 renewable energy projects the Clean Energy Fund assisted since 2000, 189 were solar photovoltaic installations. The solar projects total 15 megawatts of power, representing $77 million in clean energy funding.
“It is a very popular program,” Cifaldi said. “PV is the easiest and sexiest renewable energy.”
The Clean Energy Fund’s new two-year budget starting in October revives the incentive program for commercial solar installations. The proposed budget amount of $8.9 million can go to any renewable — including solar — with the goal of funding 10 projects totaling three megawatts of generation.
The inclusion of that funding is contingent on approval from the state Department of Public Utility Control and the General Assembly not raiding the Clean Energy Fund to pay for other programs, Cifaldi said.
The DPUC only ceased the solar incentive program because the funding ran out, said Phil Dukes, DPUC spokesman. As long the funding is available for the next two years, the program should be revived.
Connecticut solar companies are waiting for this funding, often delaying projects hoping to capitalize on new incentive programs, Trahan said.
But the $8.9 million is half of what was budgeted under previous two year budgets and the number of Connecticut companies in the solar installation industry has grown by 50 percent, Trahan said. The Clean Energy Fund alone will not support major solar operations in Connecticut.
“What funding the Clean Energy Fund has will be snatched up pretty quickly,” Trahan said. “Demand has grown significantly in the past two years for commercial and residential projects.”
The true solution is the solar credit program, and the Connecticut General Assembly must pass that measure in 2011, Trahan said.
