Delaware Incentive Programs for Solar Energy

Delaware has a mixed record on renewable energy. In 2006, Delaware came in last place among the states in large-scale grid connected renewable energy production with less than 100,000 megawatts of non-hydroelectric renewable power production statewide. This reluctance to adopt renewable power has not been shared by its citizens, which the same study found had by 2007 installed 1.2 mW of distributed solar photovoltaic capacity, making it 16^th in the nation in absolute terms and doubling the per capita rate of PV power capacity of fifth ranked New York State.

In the past seven years Delaware has taken some concrete steps to provide incentives for solar energy production, but most of these programs have become victims of their own success due to unexpected levels of demand. In this installment of our series on state solar energy incentives, we will look at and explain how each of these programs work, let you know what you need to do to qualify, and tell you what kind of legislative changes to look out for if the plan is currently not operating as intended.

Renewable Energy Certificate Trading Program

Much like the recently upgraded credit system in New Jersey, Delaware has a Renewable Energy Credit trading program in place. First established in 2005 and amended in 2007 and 2010, the trading program requires that 25% of the electricity provided to consumers by Delaware utilities be generated from renewable sources by 2026, including a 3.5% carve out for photovoltaic energy. The size of these mandates are measured in “Renewable Energy Credits,” which are awarded to renewable energy producers for each megawatt-hour of renewable energy produced during a year. In order to meet their targets, the utilities must either generate these RECs themselves, purchase them from non-utility producers of renewable energy, or pay a fine for each REC they fall short.

In Delaware, solar power is privileged above other renewable sources of energy in the trading scheme. Producing a megawatt of solar power from PV earns a solar REC, known as an SREC. Utilities must use only SRECs to meet the solar carve-out, and fines for each SREC that a utility falls short can be up to ten times greater than for each normal REC. The per-credit fines increase for the next year if a utility falls short, from a baseline of $400 up to a maximum of $500 for SRECs and from $25 to a maximum of $80 for RECs, encouraging future compliance. If the supply of SRECs exceeds the carve-out for RECs, each SREC purchased is worth three RECs for the purpose of meeting the larger standard. This means that the price ceiling for SRECs is much higher than for RECs, and that they can compete favorably with other renewable even at higher prices.

This system has largely worked to provide additional revenue for larger scale solar installations, but a number of factors make the SREC market relatively inaccessible to the home consumer. In general each 833 watts of installed capacity will generate one SREC per year, meaning that most homes will generate only a couple of SRECs a year. However, unlike other states with a renewable credit trading system, Delaware won’t accept an engineering estimate of the production capacity of your installation. In order to qualify to produce SRECs, you must have a revenue quality meter installed on your home, which usually costs from $600 to over $3,000 for parts and labor. While SRECs started selling at about $300, their price has since collapsed and converged to between $20-$40 a unit. At that price, it could take a 6kW home solar installation over a decade to pay off just the cost of the monitoring equipment.

If you are planning a large home solar panel installation it is worth keeping your eye on upcoming legislative actions regarding the trading program. If Delaware either lifts the requirement to install a revenue grade meter or substantially increases the size of the REC requirement or solar carve out, then SREC trading may provide a meaningful income stream to offset the cost of a home solar panel system. As it stands today, however, the SREC market will not provide much of a subsidy to the average Delawarean looking to put solar panels on his or her roof.

Qualification Requirements:

• Installation must be physically located in Delaware.
• You must be certified as an “Eligible Energy Resource.”
• You will need to install and monitor a retail grade electricity meter.

Important Notes:

• You will need to sell the SRECs yourself, either to a utility or an SREC broker.
• Installations whose equipment costs are derived from at least 50% Delaware-manufactured parts produce SRECs worth 1.1 credits to utilities, guaranteeing that they will be auctioned off before other SRECs.
• Installations whose construction and/or installation is performed with a labor force consisting of at least 75% legal Delaware residents also are worth 10% more to a utility.
• You will need to itemize your installation expenses, including the addresses and social security numbers of all contracted labor, in order to qualify for these bonuses.

Net Metering in Delaware

Net Metering has been around since 1999 in Delaware, and is a mixed bag in which the good outweighs the bad. If you aren’t familiar with the concept, you should take a minute to read SolarTown’s learning articles on the basics of net metering and policy options for net metering.

The good news is that the electricity your system offsets will be metered without additional fees at retail rates that include transmission charges. This means that if you generate a kWh of power, the utility won’t be able to charge you for generation, fuel, or delivery of that kWh, won’t be able to pay you wholesale while charging you retail for that kWh, and will not be able to charge you for the right to not be charged for these things. These are all things that have happened in other places, and are on the books for a reason.

The downside is that, like most states, Delaware has a cap on net metering capacity. You can only net meter power production capacity up to 110% of your expected energy consumption, up to 25kW for residential customers and 100kW for farm customers. This expected usage is usually calculated by your utility from your past consumption history, which means that you need to be careful how you approach your drive for energy independence. If you weatherproof and upgrade the energy efficiency of your home before you start your solar power installation, you may significantly reduce the size of the system you can install that will qualify for net metering! Likewise, if you are planning on future additions or changes to your home which may increase your power consumption, you may be better off tackling these projects first. If you don’t, the net metering-compliant system you can install now might not meet your energy needs in the near future.

A final consideration is how net excess generation, or “NEG,” is tracked. You receive credit at the retail rate for excess power supplied to the grid, which is then rolled over month to month. Delaware allows you to request payment for any accrued NEG credits on an annual basis, but according to the Database of State Incentives for Renewables & Efficiency (DSIRE), you are not required to do so and may continue rolling over your credits indefinitely. It is worth noting that the credits are not denominated in units of energy but in retail rates – excess power generated during a low cost period will not fully offset a shortfall of equal energy use during a high cost peak demand period.

In one sense, net metering is the best financial incentive you can have for your home solar panel system: you can stay on the grid, but only pay for the net power you use. However, due to the cap at 110% of expected usage, your ability to turn your roof into a power exporting cash machine is somewhat limited. If you are looking to pay off the cost of your installation faster than simply forgoing your electricity bill allows you to, your best bet will be turning to Delaware’s Green Energy Program.

Qualification Requirements:

• Must install a net metering capable meter, at the expense of the utility unless the new meter is larger than the current meter. If so, the customer pays the difference.
• Peak production capacity may not exceed 110% of expected power consumption.
• Total peak production capacity may not exceed 25 kW for residential and 100kW for farms.

Important Notes:

• If aggregate net metered power production exceeds 5% of the overall power production of a utility, the utility may selectively disable net metering for individual customers at its discretion.

State Grants in Delaware – The Green Energy Program

 Delaware has a set of public benefits funds collectively known as the Green Energy Program, which are administered by the state’s utilities and select municipalities. These funds, which obtain their funding from a small surcharge on the electricity bills of the customers of the utilities and municipalities, are used to provide grants for renewable energy installations for their customers.

 While all of the grants require approval before installation of the project has begun, the funds are not disbursed until after the project is complete. In this sense they act more like a rebate than a grant, in that they do not provide up front capital to invest in the project. This means that you will need to finance the full upfront cost of the project through other means.

Like the credit trading scheme, the Green Energy Program has largely been a victim of its own success and is currently under legislative review. All of the programs are oversubscribed meaning that it can take years for the utilities and municipalities to generate enough revenue from the current surcharges to pay off the existing queue of approved grants. If you are willing to tolerate the wait and can come up with the initial funding on yourself, the GEP is your best bet for making a home solar panel system or solar heating system affordable in the long run.

In the next part of this article, we describe the ongoing incentive programs for each utility. You are the customer of only one power utility provider, and you must apply to that utility’s program providing for the incentive. You cannot apply to more than one program. For the latest information, you should go to the Green Energy Program’s webpage.

Delmarva Power

Delmarva Power offers grants to its customers for photovoltaic power generation and solar water heating. For PV, Delmarva offers different subsidy rates for the first 5kW installed, the next 5kw, and the following 40kW. For solar water heating, they offer a straight subsidy per kW-h saved up to a certain maximum amount.

 PV Grant Rates (per Watt)

	Subsidy (5kw/10kw/50kw)			Max:
Residential	$1.25	$0.75	$0.35	$15,000
Non-Residential	$1.25	$0.75	$0.35	$24,000
Non-Profit	$2.55	$0.75	$0.35	$48,000

Solar Water Heating Grant Rates (per kW-h saved)

	Heater & Integrated*	Max:
Residential	$1.00	$5,000
Non-Residential	$1.00	$10,000
Non-Profit	$2.00	$10,000

*While currently considered different categories, the subsidy rate is the same

Qualification Requirements:

• Must be a customer of Delmarva Power
• Must undergo a building energy audit before application
• Must be an energy star certified building, if part of new construction
• System must be 50kW or less
• Must have a 5 year warranty on all parts and labor
• Must meet utility and local orientation, shading, and aesthetic standards

Important Notes:

• Subsidy rates reflect maximum possible grant. Individual grants will vary
• For up to date information and forms, go to Delmarva GEP’s homepage

Average Annual Funds: $1.87 million, including funds for other renewable energy sources such as wind and fuel cells. Only 65% of revenue may be spent per year.

Current Backlog:

• Residential: None
• Non-Residential: $2,183,061.48 as of June 2012

Delaware Electric Cooperative

The Delaware Electric Cooperative offers grants to its members for the installation of photovoltaic power generation at two different rates: per watt for the first 5kW, and per watt for each additional watt above 5kW up to a given maximum. The Cooperative organizes its customers into Class A (less than 50kW) customers and Class B (more than 50kW) customers, which it uses to determine the maximum grant. Class A non-profit customers are considered Class B for purposes of the grant.

 PV Incentive Rates (per Watt)

	Subsidy (5kw/50kw)		Max: (Class A / Class B)
Residential	$0.90	$0.45	$7,500	$10,000
Non-Profit	$1.05	$0.52	$7,500	$10,000

Solar Water Heating Rates

	Percent of Heater Cost	Max:
Class A	20%	$3,000
Class B	20%	$7,500

Qualification Requirements:

• DEC may require a BPI certified energy audit
• Must provide site specific diagram of planned system
• Parts and labor must come with a 5 year warranty (self-installers must warranty their own work)
• Minimum 500w array size
• Battery backup systems may not receive grants
• Must meet collective orientation, tilt, shading, and aesthetic standards

Important Notes:

• Funding is now allocated on a first come, first serve annual basis. In 2012, Class A PV funding ran out on April 4^th.

Average Annual Funds: $468,000, of which 50% is earmarked for Class A PV, 20% is earmarked for class B. Solar heating is not earmarked, but can be drawn from surplus unused funds.

Current Backlog: $1,431,932.92. As of August 2012, there is approximately a 3-year wait.

DEMEC (Delaware Municipal Electric Corporation)

The grant situation through the Delaware Municipal Electric Corporation is more complicated than with Delmarva or DEC. Rather than offering a single plan, DEMEC opted to have each of its nine constituent municipal utilities create their own GEP funds under the 2005 Renewable Portfolio Standard legislation. Of these nine municipal utilities, five have since opted out of offering individual grants, either to redirect more funds to community projects or to discontinue support entirely. The remaining four, Newark, Milford, Dover, and New Castle, all have separate rates and funding sources.

DEMEC has a website which lists the different programs and has all the necessary application materials. Of the remaining municipalities only Dover has publicly listed incentive rates and caps.

Dover

PV Grant Rates (per Watt)

	Subsidy (5kw/10kw/50kw)			Max:
Residential	$1.25	$0.75	$0.35	$7,500
Non-Residential	$1.25	$0.75	$0.35	$15,000
Non-Profit	$2.55	$1.50	$0.70	$15,000

Solar Water Heating Grant Rates (per kW-h saved)

	Heater & Integrated*	Max:
Residential	$1.00	$2,500
Non-Residential	$1.00	$7,500
Non-Profit	$1.00	$7,500

*While currently considered different categories, the subsidy rate is the same

Qualification Requirements: DEMEC has an application checklist that gives a standardized list of the steps someone must take in order to apply for any of the municipal programs.

Average Annual Funds: $324,000 between the nine municipalities in 2008. At the time of this writing, more recent data for the three remaining municipalities could not be found.

Current Backlog: There is a backlog, but it is not publicly listed. The DEMEC website instructs DEMEC customers to contact Scott Lynch of DEMEC at (302) 653-2733 for up to date “pipeline” information.

The Future for Economic Incentives for Solar Energy in Delaware 

Renewable energy incentives in Delaware are a mixed bag. The incentive systems have clearly been quite successful, but their scope was not prepared for the scale of demand. While this has reduced their current effectiveness, there is good news: most are either currently in review for legislative revision to make them more effective, or are pending such review. If you are interested in setting up a home solar panel system in Delaware, but the current incentives won’t make the difference for you, most likely all you need to do is wait. Better yet, head over to the Green Energy Program homepage, find your utility provider, and get the information on how to submit suggestions or attend a town hall meeting on the changes.