Colorado’s future in wind energy and solar power

About 1,200 wind turbines are spinning on Colorado’s Eastern Plains, hundreds of acres of solar energy arrays are tilted skyward in the San Luis Valley and the roofs of more than 10,000 homes and businesses sport solar panels.

Since voters in 2004 passed Amendment 37 — which set a state renewable-energy standard — Colorado has built or committed to about 2.5 gigawatts of renewable generation.

That’s enough energy to power between 500,000 and 650,000 homes, based on estimates from the wind power and solar energy industries.

The standard, however, is close to being met, and the future for renewable-energy incentives is uncertain. So, the question is: What is renewable energy’s future in Colorado?

"Are we going to see the billion dollars in renewable investment that was made in the last five years repeated in the next few years?" asked TJ Deora, director of the Governor’s Energy Office. "We aren’t going to see a lot of local growth," Deora said.

The last seven years have seen the creation of more than 11,000 renewable- energy-related jobs in the state, according to industry trade groups that warn the growth might stall or reverse.

To be sure, some utilities are pushing ahead with renewable-energy projects, and leasing companies are making it possible for homeowners to install solar panels on their roofs.

"Customers want renewable energy," said Jerry Marizza, new-energy coordinator for United Power, a Brighton-based electric cooperative serving 120,000 people.

United developed the state’s first "solar farm" and last year started using landfill gas to make electricity.

Still, Colorado is at a renewable-energy "plateau," said James Newcombe, director of the electricity practice at the Rocky Mountain Institute, an energy-consulting group based in Snowmass. "The landscape will be more challenging for renewables."

Much of the push came from the state renewable-energy standard, which requires investor-owner utilities to generate 30 percent of their power from renewable sources, and municipal utilities and cooperatives to generate 10 percent by 2020.

Those goals are now close to being met.

After creating or contracting for 2.4 gigawatts of wind farm, solar power and roof-top solar generation, Xcel Energy, the state’s largest utility, said it will meet the standard ahead of schedule, and with small additions, it will be in compliance through 2028.

Black Hills Energy, which serves Pueblo and southeastern Colorado, also has to meet the 30 percent standard.

The Rapid City, S.D.-based utility is generating 12 percent of its power from renewable sources, said Chris Burke, vice president of Colorado operations.

Black Hills has announced a 29-megawatt wind farm project and will likely add another 125 to 150 megawatts of wind power, Burke said.

Two municipal utilities — in Colorado Springs and Fort Collins — have to meet the 10 percent target. Colorado Springs Utilities is planning to add 50 megawatts of wind farm and already has 2 megawatts of rooftop solar through its own incentive program.

"Colorado Springs doesn’t need any new resources until 2024," said Mark James, the manager overseeing renewable energy for the utility.

In Fort Collins, the City Council has called for a strategic energy plan focusing on local projects, said Steve Catanach, manager of Fort Collins Power & Light.

The city will need between 80 megawatts and 135 megawatts of generation to meet the standard, Catanach said.

Another area where renewable-energy growth has cooled off is the installation of home and business rooftop solar, which was fueled by incentive programs offered by the utilities.

Xcel trims incentivesSince 2006, Xcel has through its SolarRewards program provided nearly $250 million in rebates and credits — from a fund created by adding a 2 percent charge on customer bills.

About 9,600 solar arrays have been installed, but the fund is $51 million in the red, and Xcel has cut back on incentives and capped the program.

"We’ve shifted our focus to other states, and we’ve had to trim staff," said Jim Welch, chief executive of Bella Energy, a Boulder-based solar installer.

Bella’s current projects include a solar-panel installation on the Salt Palace in Salt Lake City. The company is also working in New Jersey, Delaware and New England.

About 6,100 people in the state are employed in solar energy, according to a study by the nonprofit Solar Foundation.

"Colorado is a leader in renewable-energy jobs, but that’s going to change if these issues aren’t addressed," said Neil Lurie, executive director of the Colorado Solar Energy Industries Association.

Compounding the loss of state incentives is uncertainty about the future of key federal subsidies — production tax credits for wind power and solar energy, and a program that offered cash grants for projects.

The wind-production tax credit — equal to $22 for each megawatt a wind farm produces — is set to expire in December. The solar tax credit expires next year.

Also set to lapse this year is a federal program, known as Section 1603, that enabled energy developers to get a cash grant instead of tax credits.

The program was started in 2009 when few investors were looking for tax credits.

"The 1603 program made projects easier to develop," said Blake Jones, chief executive of Namaste Solar, a Boulder-based solar installer that is also doing more of its work from Kansas to New York.

"It is just very difficult to plan for the Colorado solar market," Jones said.

Growth opportunitiesDespite the headwinds, renewable-energy advocates say there are still opportunities for renewable energy in the state.

Xcel may soon reach the 30 percent renewable-energy standard, but the state average in 2009 was just 6.5 percent, said John Nielsen, energy-program director for the environmental-policy group Western Resource Advocates.

One of the places for growth is in rural electric cooperatives, another is in solar gardens, in which residents can buy shares, Nielsen said.

Cooperatives must also meet the 10 percent renewable-energy standard, and there are already 25 cooperative projects adding up to 35 megawatts, including the two by United Power.

United Power’s "solar farm," begun in 2009, enables customers to pay $1,050 for a 210-watt panel with a 25-year lease — about enough time to pay off the investment.

"We did this as a service and did it grow-as-you-go," said United’s Marizza. The farm started out as 10 kilowatts and has now doubled in size as customers joined.

In 2011, the legislature passed a law promoting solar gardens, and industry executives say they hope this will be a growth area.

Some advocate raising the renewable-energy standard above 30 percent.

"In October, Xcel hit a record 55 percent of the electricity on the system coming from wind power," said Ron Lehr, western representative for the American Wind Energy Association, a trade group. "Let’s keep it going."

Prices get competitiveThe biggest boost for renewables, however, may come as they become cheaper and more competitive with other energy sources.

Solar-panel prices have dropped 40 percent this year to about $4 a watt, and the price for a solar installation is expected to continue to drop, Namaste’s Jones said.

The cost that Xcel is paying for wind power has been cut almost in half in the past 10 years to $32 a megawatt-hour, said Deora of the Governor’s Energy Office.

That price is close to being competitive with coal and natural gas, according to the federal Energy Information Administration.

"The long-term goal is for renewables to compete without subsidies as part of a balanced energy portfolio," Deora said.

Xcel Energy has been the largest purchaser of renewable energy in Colorado. The Minneapolis-based utility by the end of this year is slated to have nearly 2.4 gigawatts of renewable energy on its system.

The energy sources:

2,200 megawatts from wind farms

85 megawatts of utility-scale solar projects

83 megawatts of residential and small-business installations on 9,600 rooftops

Mark Jaffe,