Virginia to Establish Renewable Energy Incentive
On Monday we highlighted "headaches" that may arise from climate-related stimulus funding. Cities and towns are struggling to come up with worthy programs for the funds. Furthermore, the Department of Energy has warned officials that funding should go towards the long-term establishment of programs:
"Don't use the entire amount of this money to set up a single capital fund that when that fund is done, your program is done," Bailey told local officials. "Because you will have potentially, I think, wasted an opportunity to set in motion a program that could last five, 10, 15, 20 years."
Virginia should heed this advice. The state recently announced plans to use stimulus funding from the DOE to create a long-awaited financial incentive program for renewable energy development:
After years of zero financial incentives for alternative-energy enthusiasts, Virginia is bursting out of the starting gate with tens of millions of stimulus dollars just for renewable-energy aid.
The state plans to set aside $39 million from its $70 million share of the federal stimulus package to help residents, businesses, nonprofits, schools and government agencies summon electricity and heat from the sun and wind.
Funding is expected to start flowing for the program, if approved, in July. The incentive program will be a great short-term solution for renewable energy development in Virginia. Turns out, though, the long term prospects for a state funding to continue the incentive program are unclear:
That money runs out in September 2010, and Jurman, a self-described eternal optimist, acknowledges that he could still have trouble getting legislative backing then. . . .
Energy advocates worry about the consequences if the incentives disappear after merely a year.
“It looks like we’re going to grow very easily, but it’s not going to shrink easily,” said Peter Lowenthal, executive director of the Maryland-District of Columbia-Virginia Solar Energy Industries Association, which is advising the Virginia agency on the renewable-energy rebate program. “It will be a shot in the arm. People will get some training, so that’s a good thing. But it won’t really meet the goals of the stimulus in order to create permanent job growth.”
Are there better ways to setup renewable energy development incentive programs for Virginia?
Ugh. Rebates. There's a reason that the states leading renewable development have moved from rebates to more market-based incentives that (not coincidentally) shift the cost burden from the state to the utility providers.
I would add that with solar prices falling to about $6/installed watt and the 30% Federal ITC becoming refundable for the same time period (ie. cash grant), the affordability of renewables is dramatically increased without resorting to state-level rebates.
The problem with the VA rebates is not only are they divvying up a small pie amongst three big groups, but that a one year horizon is insufficient to establish any type of business. Most likely the plan (whenever approved) will take 2-3 months to develop, another 2-3 months to publicize, and 2-3 months to pay out. I'm doubtful that anything funds will be forthcoming prior to the end of the year and would rate an extension of this plan extremely doubtful. The House of Delegates is not known for its policymaking acumen.
More bothersome, however, is that these few initial details do not seem to tie into a larger whole. How will Dominion VA's power line development be affected? Will school rehab funds be combined with renewable energy funds? Is there any expectation that these funds will/can be used to create a revolving loan fund? Otherwise, the rebates are granted to a select few and disappear, providing no additional benefit to the rest of the Commonwealth.
Sigh. This is not the best VA can do.