Hefty new federal tax credits and ambitions for cheaper, cleaner energy have lured record numbers of Long Islanders to install solar energy systems this year, raising concerns about LIPA's ability to keep up.
Applications for the Long Island Power Authority's generous rebates in the first quarter were triple last year's levels, and LIPA has already committed around half of its $12.5-million 2009 solar rebate budget.
Solar proponents and contractors worry that LIPA will reduce or even temporarily suspend the program if the budget runs out. LIPA last week said it is seeking additional funding sources and will adjust the program to keep it flush, if needed.
The surge in interest should be no surprise: Federal tax credits expanded with last year's stimulus bill let homeowners receive a credit for a third of the cost of a system, excluding LIPA's rebate, and removed a previous $2,000 cap. For systems that can cost between $30,000 and $75,000, the new federal credits, which can be taken over two years, are a big boost, knocking years off the five to 10 years it usually takes to pay off a system.
LIPA has had a fairly generous solar program since 2000, rebating nearly half the total cost (the $3.50 a watt it pays is a reduction from introductory rates, however). That puts LIPA among the more aggressive utilities in the nation, experts say, and in league with solar proponent states from California to New Jersey. The Obama administration's emphasis on renewable energy has further propelled interest and investment, as stimulus money begins making its way to states.
The new credits have caught the interest of fence sitters on Long Island. After deciding against solar energy last August because of high costs, Matthew Rutigliano recently changed his mind. Federal tax credits of $12,500 "made the difference," he said, giving him more to offset the cost of panels on a home he's building in Water Mill.
He's not alone: The pace of new solar rebate applications on Long Island has jumped to 183 in the first three months this year from 59 in the same period a year ago, according to LIPA. Around 65 percent of applications result in actual projects and payouts.
LIPA this year already paid out $3.3 million to 138 customers. The 183 new applications represent a potential payout of another $4.4 million. The combined sum represents more than half of LIPA's $12.5 million solar rebate budget just three months into the year -- unprecedented interest for a program that took a full seven years to entice just 1,000 customers starting in 2000. LIPA's rebate, a cash payment that can cut more than $30,000 of the total cost, is an even larger enticement than the tax credit, which is why so many are worried the funding could run out. Installers say if LIPA doesn't replenish the fund, the nascent industry would be crippled.
"We're trying hard to convince LIPA to phase down the rebates, but also to fully fund the program," said Marc Clejan, co-founder of GreenLogic Energy, a Southampton-based contractor. "Their running out of money would be very detrimental to the industry here."
Jamie Minnick, who owns Eastern Energy Systems in Laurel, put it more bluntly. "If they suspend that rebate, every solar installer goes out of business."
The 26 contractors constituting the Long Island Solar Energy Industries Association depend on the rebates for business.
LIPA says it has been "closely monitoring" application levels and the budget. "We will be seeking stimulus funds to plug any projected budget shortfall to meet demand," LIPA chief executive Kevin Law said in an e-mail last week. "We would rather cut the current LIPA rebate level than put the program on ice for the last quarter of the year," as had been widely rumored.
There are few unhappy customers among solar converts on Long Island. Systems can cut hundreds of dollars off a monthly electric bill, even lead to credits with LIPA depending on sunlight, panel positioning and home electricity use.
Long Beach homeowner Michael Miller signed up for a solar system in January and hasn't looked back. His LIPA bill of several hundred dollars has been "almost completely eradicated." Last month it was $52, including a $5 fee for connection to LIPA's grid. He expects to lower the bill further and begin to earn LIPA credits once longer days and more direct sunlight increase energy production.
R. Sail Van Nostrand, owner of installer Energy By Choice in Greenlawn, said the 20-30 percent increase in business this year alone would likely be much higher if the economy hadn't tanked. He can't imagine LIPA suspending the rebate. "The industry still relies on it pretty heavily," he said. "Our hope is LIPA will find a way to continually refund solar costs."
Clejan said given the ability of solar systems to produce maximum energy during peak summer periods, LIPA should rethink priorities that now tie up its budget in long-term power-plant contracts. "If they put that money into solar programs, we might be able to avoid those peaks," he said.