General Electric is scrapping plans to build a $300 million solar panel factory in Aurora, which would’ve been the largest of its kind in the nation.  The company had earlier suspended work on the project, amid falling prices and rising inventory for the panels.  

Those same factors are prompting Xcel Energy to reconsider an incentive program that has encouraged many Coloradans to invest up to $35,000 apiece in rooftop solar electric systems. 

Blake Jones is one of them.  He runs Namaste Solar, and like many solar installers, he has panels on his house too.  He installed a system on what is now his home back in 2006, when his company was first getting off the ground, but he didn't end up buying the house until last year.

“It was just a fun bonus that Namaste Solar installed the PV system here,” he says.

Jones has enough solar panels to essentially zero out his utility bill. During the sunny part of the day he sells electricity his house can’t use back to Xcel. Jones makes enough from that to pay for the electricity he gets from Xcel at night, when it’s too dark for the panels to work.

He says the arrangement is “one of the cornerstones, and the foundation upon which the solar market in the United States has been built.”

Xcel now thinks it could be paying people like Blake Jones too much. The company is telling state regulators that customers without solar panels could be unfairly subsidizing his use of the electric grid.  

If Xcel ends up reducing the payments for power, Jones says many solar customers will decide the upfront investment isn’t worth it.

“This is a pretty serious threat to the future of Colorado’s solar market,” he says.

Xcel calls that a typical exaggeration. Karen Hyde, a vice president with the utility, says solar companies made the same argument when Xcel slashed rebates for solar panel installations a couple of years ago.

“Each time they say that we’re hostile and killing the industry," Hyde says, "but in fact they’ve re-looked at their business plans and have been able to thrive through those changes."

She says that’s because solar costs are falling, making it attractive for many more homes and businesses to install panels. She argues, it’s now fair for Xcel to re-evaluate what it pays customers for their solar power.

“This is kind of the last big piece of incentive,” says Hyde, “and it seems reasonable that if you project that if you’re going to have that much solar installed that the costs will continue to come down, and really is that incentive warranted?”

Environmental groups say the problem is that Xcel has no incentive to see rooftop solar succeed.

“Having their customers have the ability to harness free sunshine through a technology that is becoming more and more affordable really is a threat to their old way of doing business,” says Annie Lappé with the Vote Solar Initiative.

She says Xcel, like many utilities in America, makes money by building big central power plants and delivering that electricity.  

Solar makes up less than 1% of all the power on the company’s grid - just 15,000 rooftops have panels. Lappé thinks Xcel is doing its best to make sure that number stays small. 

“They have lots of levers to slow the growth of solar,” says Lappé. “We’re seeing Xcel use many of these levers.”

Now, state regulators must weigh in on whether the utility’s solar power payments are too generous. Lappé charges Xcel has already decided to cut the rates. 

Blake Jones with Namaste Solar says the eventual ruling could determine the future of his business.  

“I think this is where we as Coloradans need to decide what’s most important to us, what do we want,” he says, “because what’s best for Xcel Energy isn’t necessarily best for Colorado.”

Xcel says if regulators don’t agree to review its solar pricing, it will propose to restrict the number of new solar installations it allows next year.  The solar industry calls that extortion.

[Photo: Flickr user LanceCheungImages]