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Delaware Rises To The Top Of The (Solar) Pack

Avatar for Dave Llorens
Updated 06/20/2012

We’ve been giving out kudos lately here at SPR (check out our recent blog singing Boston’s praises) and while we’re at it, we can’t miss Delaware. The last time we check in with the state solar policy was lukewarm at best, and we gave it a mediocre “C” grade. Boy have things changed! If you check out the Delaware state page now, you’ll see Delaware boasts one of the shortest payback timeframes in the nation for residential solar power systems.

How has Delaware gone from the middle of the pack to top of the heap so quickly? Simple, really; Delaware built solar incentives around a top-notch Renewables Portfolio Standard (“RPS”). An RPS is a law that sets minimum levels –generally a certain percentage of total electricity production– of renewable energy that utilities must produce by a certain date.

Delaware’s RPS mandates 25% renewable energy by 2025-2026, including 3.5% from solar power. That’s a pretty strong Standard, and its implementation proves what we’ve been saying over and over again in our state updates: a strong RPS is the core of successful statewide solar policy.

Delaware’s RPS was first passed in 2005 with an initial goal of 10% renewable energy. In 2007 the renewable energy minimum was raised to 20%, and a solar carve-out of approximately 2% was added. Standards were raised again in 2010 to their the 25%/3.5% levels they remain at today.

As the RPS has grown, the available incentives have grown with it. Nearly every Delaware resident now qualifies for a hefty up-front rebate on the purchase of a residential solar power system through the Delaware Green Energy Program. In fact, because of the RPS’ 3.5% solar-specific requirement, two of the three major rebate programs here offer $5,000 more in potential rebates for residential solar systems compared to other forms of renewable energy.

OK. So the RPS’ rising standards have helped improve the rebate situation, but has it generated other solar incentives?

Sure has! Delaware’s Solar Renewable Energy Credit (“SREC”) market is strong primarily because SRECS are tied directly to the RPS. For every 1000 kilowatt-hours (“kwh”) of solar power you produce you get 1 SREC. The utility companies are allowed to purchase those SRECs to use toward their RPS minimums.

Because the RPS imposes hefty fines on utility companies that fall short of the required levels of renewable energy production, SRECs can bring in a lot of extra cash for you while still being cheaper than paying penalties for the utility companies. That’s kept prices high.

In the past we’ve seen SRECs go for over $600 each, but the recent market suggests that about $310 per SREC is a more practical estimate of your expected return. Still, at $310/SREC, you’re making close to two grand ($1,814) just in the first year on a 5kw system!

Really … that’s pretty much it. That’s everything Delaware needed to do to make itself one of the strongest states in the nation for solar power.

It’s amazing what a few big fat checks can do, huh? And it all started with the strengthening of the Renewables Portfolio Standard. That simple straightforward lesson is one we hope other states will follow.

It’s also a lesson that shouldn’t surprise us of course. Setting mandatory renewable energy levels forces politicians and utility companies to talk less and do more about renewable energy.

We’ve covered a lot of solar policy in a lot of states here at Solar Power Rocks, and if there is one pattern we are absolutely certain of, it’s this: show us a state with a strong Renewables Portfolio Standard, and we’ll show you a state with strong solar policy. Welcome to the club, Delaware.

Last modified: June 20, 2012

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