Questions raised about renewables fund
By PETER HIRSCHFELD
Vermont Press Bureau | December 03,2012
MONTPELIER — Since he co-founded the company about a year ago, James Moore has brought on 25 employees to handle growing demand at his thriving residential solar business.
The former renewable-energy advocate credits numerous factors with his early success. But one economic variable in particular, Moore says, has fueled Suncommon’s growth — the 55-cent-per-watt rebate his customers receive from a public fund established by Vermont lawmakers in 2005.
Moore is among the 300 Vermont energy businesses that have derived financial benefits from the Clean Energy Development Fund, and will be among those pushing forcefully for renewed funding in the fiscal year 2014 budget.
The head of the fund is assuming he’ll have at least $5 million to invest in solar, hydro or other small-scale projects in fiscal year 2014. But Gov. Peter Shumlin isn’t making any dollar commitments yet for a pool of money on which renewable energy developers say they’re relying to grow jobs in the emerging sector.
“(The rebate) is less than 10 percent of the project’s total cost, but that little margin is really, really important to making the economics work for this growing sector,” Moore said last week. “If it just went away, business would slow down, we wouldn’t be able to employ so many people, and fewer Vermonters would be able to afford solar.”
The expiration of an agreement between the owners of Vermont Yankee and the state of Vermont has clouded the funding picture for the state’s largest taxpayer-funded renewable energy program.
Entergy had formerly provided anywhere between $4 million and $7 million annually to the fund, in exchange for the right to store its spent nuclear waste in Vernon. The agreement expired earlier this year.
In a draft plan released publicly last week, Andrew Perchlik, director of the Clean Energy Development Fund, said the fund “anticipates an annual appropriation of at least $5 million.” Perchlik said last week that the figure was based on guidance issued by lawmakers and administration officials earlier this year.
At a news conference last Tuesday, Gov. Peter Shumlin said it’s too early to speculate on how much he’ll propose for the fund, or where the money will come from.
Renewable-energy advocates and business executives like Moore will no doubt be pushing the Democratic governor for a robust appropriation.
Gabrielle Stebbins, executive director of the trade group Renewable Energy Vermont, says the rebates have enabled more than 2,500 individual projects since 2005. Money invested by the fund, she said, has leveraged tens of millions of additional dollars in private investment.
And the benefit isn’t limited to the companies benefiting directly from the rebates, Stebbins said. Suncommon, for instance, keeps about 30 contractors busy performing installations for its projects.
“The upstream impacts of these investments are really critical,” Stebbins said.
Republican candidate for governor Randy Brock this fall criticized the state’s renewable-energy incentives as a taxpayer-funded crutch for an industry that lacks the strength to fend for itself in the free-market.
Rep. Tony Klein, an East Montpelier Democrat and chairman of the House Committee on Energy who helped form the CEDF, said nascent technologies like the one sold by Moore still need help getting off the ground.
“There is a role for government to play,” Klein said.
But Klein said the industry will at some point need to learn to ride without training wheels. When lawmakers established the fund, he said, they surveyed leaders in the renewable-energy industry to find out how much financial help they’d need, and for how long.
“The consensus was $7 million to $10 million a year for seven to 10 years,” Klein said. “We’re coming up on that, and there’s a part of me that says, ‘when is enough enough?’”
Klein said if the administration can find somewhere to get the money, then he’s all for giving the CEDF the $5 million Perchlik has penciled into his ledger.
“But at a certain point I worry about dependencies being built and expectations being assumed,” Klein said. “Maybe it becomes a security blanket.”
Moore says he isn’t opposed to the discontinuation of subsidies, but not until the industry achieves self-reliance. The decrease in solar subsidies over the past seven years, Moore said, shows evidence of progress. Rebates for residential solar projects have gone from $2.75 per watt to 55 cents per watt.
“It’s been going down and down and down, and we ultimately think it could and should go away, eventually,” Moore said. “But ripping it out right now could have a really devastating impact.”
Stebbins, meanwhile, said government should make permanent its role in underwriting energy projects through the CEDF. She said massive subsidies for fossil fuels embedded in federal policies make it impossible for solar, wind and other renewable industries to compete on a level playing field otherwise.
“If we want to see a movement toward clean energy and towards energy that is locally made and that is not affecting the climate, then we’re going to have to either level the playing field and take away subsidies and tax cuts for all energy types, or we need to ensure stable funding for programs like this,” Stebbins said.