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Austin Energy Revamps Solar Incentive Program

Austin Energy has devised a new approach for incentivizing solar power among its commercial, multifamily, and non-profit customers.

The municipal electric utility said the new approach saves $2.4 million over the life of the program compared to the old way of administering the program for those customers.

Rather than provide an upfront rebate on the installation of solar systems, Austin Energy will pay for each kilowatt-hour of electricity produced over a 10-year period. This is known as a fixed performance-based incentive (PBI) and it achieves two goals. First, it provides a fixed payment flow to a system owner by which payback can be calculated and second, it encourages proper design and maintenance of systems to maximize their production.

Over the next five years, the PBI program is expected to pay, on average, 8 cents per kWh of solar energy produced with program funding sufficient for almost 260 solar systems, each up to 20 kW in size. Total PBI payments over the next 14 years under the plan are projected at $4.8 million.

“When you combine federal tax credits available for solar installations along with the incentive this program provides, energy savings for most businesses and apartment communities will pay for their system in 6-8 years,” said Karl R. Rábago, Vice President for Distributed Energy Services. “The life of these systems is 25 years on average.”

Since the inception of the Austin Energy Solar Rebate Program in 2004, the utility has issued $12.8 million in rebates to residential customers and $6.3 million in rebates to commercial customers. There are 1,052 customer-owned solar systems and 52 municipal and school installations totaling more than 4 MW of solar capacity in Austin. When the program began, Austin had three solar design and installing companies. Today there are 35 solar companies in the Austin area with a workforce approaching 300.

Austin Energy residential customers may now apply to receive rebates at $2.50 per watt, with annual rebates limited to $15,000 and maximum rebates set at $50,000 over the life of installations at a single property. To qualify for Austin Energy solar rebates, a customer must also meet home energy efficiency standards.

Austin Energy said it is now moving forward to address special issues of concern to the non-profit and low-income communities, and will be working with business stakeholders to address the issues and opportunities relating to private sector development of very large solar systems.