(2-21-06) Question: Solar thermal installations output must meet at least 50% of the load to qualify for tax credit. How is it determined that this requirement has been met? How should it be documented? In what format should it be submitted?

If an all-electric (electric space heating, water heating, cooking, in addition to all the standard electric appliances such as lights, TV, etc.) residence has a solar thermal system installed for domestic hot water:

     1) how should we determine what portion of the electrical usage is for water heating and
     2) how should we determine the kWh contributed by the solar system?

Question: Are combination solar thermal liquid systems that heat a large tank of water which in turn heats both space and hot water 100% eligible for the federal credit so long as the system is certified?

Answer: Yes, if the system also meets all of the other requirements contained in new Section 25D-plus the Solar Rating Certification. New Section 25D RESIDENTIAL ENERGY EFFICIENT PROPERTY provides, ''(1) QUALIFIED SOLAR WATER HEATING PROPERTY EXPENDITURE.-

The term 'qualified solar water heating property expenditure' means expenditure for property.

1. to heat water,
2. for use in a dwelling unit,
3. located in the United States and
4. used as a residence by the taxpayer,
5. if at least half of the energy used by such property for such purpose is derived from the sun.

Thus each of the 5 requirements plus the following must be met in order to qualify for the individual residential credit.

(2) CERTIFICATION OF SOLAR WATER HEATING PROPERTY.-
No credit shall be allowed under this section for an item of property described in subsection (d)(1) unless such property is certified for performance by the non-profit Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which such property is installed.

Question: I remember reading that Xcel would be offering a one time renewable energy credit (REC) for solar electric systems installed in the past including systems located outside the Xcel territory. Is this still happening? If so, when, which areas of Colorado are included, how much will the REC be, and will this REC be available to new systems installed this year, next year, will the REC apply to solar electric systems that are not tied to the grid, etc.??

Answer: Yes, there is intended to be at least a one time credit that will apply to all On-Site Solar Systems existing prior to December 1, 2004, and if Off-grid, whenever installed. The offer is presently required by March 31, 2006 , but this may slip in so far as the rule is not likely to be final under Colorado PUC procedures until approximately then.

In Section 3658. Standard Rebate Offer as adopted by the Commission, the rule as adopted at the present time provides, in part

(b) On or before March 31, 2006, each QRU shall make a one-time offer to purchase, under a Renewable Energy Credit Contract, the SO-RECs associated with On-site Solar Systems, up to a maximum of 10 kW per system existing prior to December 1, 2004, and Off-grid On-site Solar Systems, up to a maximum of 10 kW per system. The purchase price offered by the QRU for such SO-RECs shall be no less than the QRU's then current standard offer payment rate for SO-RECs, exclusive of the standard rebate payment, associated with the QRU's Standard Rebate Offer and established pursuant to Rule 3658. Subsequent offers shall be made at the discretion of the QRU. SO-RECs purchased by a QRU pursuant to this rule may be counted for purposes of compliance with the Renewable Energy Standard.

Note the red highlighted language that gives the utilities the option of again acquiring RECs from Off Grid systems. Initially, at least with respect to Xcel, the REC payment will be $2.50. Therefore, these will be cheap RECs, and if any utility does not meet its obligation and has not offered to acquire such Off Grid RECs, they would be open to very serious criticism, that I would not expect that would believe worth the small savings potentially available by not paying.

With respect to where these RECs will be paid, Xcel has already stated its intention to pay $2.50 to all installations within its territory. Other utilities have not yet committed at this time, but if subject to the requirement, can be expected to at least make the first offer. Xcel has indicated a potential interest in acquiring such RECs in other territories within the state, but I don't believe has yet committed.