Xcel Energy Cuts Subsidy For Residential Solar Systems

The battered solar sector has received some more alarming news, this time from the Minneapolis-based utility Xcel Energy (XEL). According to the Denver Post, the company on Friday cut the credit offered on a typical household photovoltaic system to $6,750 from $11,250.

The Post noted that in a letter to the Colorado PUC, Xcel said it was cutting its solar subsidy because Congress voted to lift the $2,000 maximum on the federal solar investment tax credit. Essentially, Xcel said that because customers will get a bigger boost from Uncle Sam, it could cut its own discount without much of a change in overall consumer system costs. The story notes that Xcel now estimates that a typical rooftop solar system of 4.5 KW will cost customers $14.175 after all credits and rebates, versus $13,750 before Xcel’s credit reduction. While not a big change in overall costs, the move does have the effect of sharply increasing upfront costs, since the tax credit is not received immediately.

In a research note this morning, Hapoalim Securities analyst Gordon Johnson asserts that if Xcel’s move starts a trend, “there could be material retrenchment in residential solar demand.”

Earlier: UBS Turns Cautious On Solar; Sees Slowdown in Germany; Downgrades SPWRA, ESLR, ENER, SOLR