Apr 24, 2009

Texas Moves to Foster Solar Power

State Senate Passes Bill Offering $500 Million to Subsidize Small-Scale Users

AUSTIN, Texas -- The Texas state legislature is expected to soon approve one of the largest subsidy programs for solar-power in the U.S.

Long a leader in oil and natural gas-based energy, Texas embraced wind power years ago and generates more electricity from wind than any other state. Building on that, the state senate on Tuesday overwhelmingly approved $500 million over five years for a rebate program to encourage solar-power installations, while a senate committee advanced a bill that would mandate a roughly 60% increase in electricity derived from renewable sources other than wind.

At least 30% of the $500 million -- which is to come from electric-bill fees -- would be dedicated to small-scale installations. The legislation also bars homeowners associations from prohibiting residential solar panels. The bill awaits a vote by the Texas House of Representatives.

Jim Marston, head of the Texas chapter of Environmental Defense, said he expects the rebates would bring Texas about 250 to 500 megawatts of solar-power generation, which now costs more than other electricity sources but is being buoyed by government support and falling manufacturing costs. That is roughly equivalent to the output from a natural-gas power plant.

There are currently 590 megawatts of solar generating capacity in the U.S., according to the federal Energy Information Administration, and that is expected to grow to 900 megawatts by 2014.

Raymond Walker, general counsel of Standard Renewable Energy, a Houston company that installs solar panels for homes and businesses, said he was encouraged. The bill, he said, "signals to the industry that Texas is a good place to do business for the renewable-energy industry."

One potential drawback is the price at which homeowners would be able sell their excess solar power to utilities -- an important factor in calculating how long it takes to recover the cost of installing solar panels. The bill requires that utilities purchase surpluses at a "fair market price," which can be 20% less than the going rate for retail electricity.

Other states require utilities to match the going rate when buying excess solar power, said Rusty Haynes, a program manager at the North Carolina Solar Center, a government-funded information clearinghouse. That discrepancy will slow the adaptation by Texans, he said.

The bill approved by the senate panel, meanwhile, would require that Texas get 3,000 megawatts -- about 3.8% -- of its electricity from renewable sources other than wind. Texas already mandates that more than 5,000 megawatts come from wind. Solar advocates say this will help jumpstart a solar-manufacturing industry in Texas.

"These new bills would bring [Texas] into the forefront of states that have solar incentives and possibly help make them a leading producer of solar electricity," said Glen Andersen, who tracks renewable energy for the National Conference of State Legislatures.

Other states are being even more aggressive on this front. A new Arizona law requires that 4.5% of its electricity come from solar power by 2025, and New Mexico is aiming for 4% by 2020. California is considering a requirement that the state get 33% of its electricity from renewable sources by 2020.

Write to Russell Gold at russell.gold@wsj.com

4/23/09

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