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Ask John Crandall how his solar power system is working out, and you'll get a one-word answer: "Perfectly."

He's so thrilled with the photovoltaic cell installation at his Old Town Bike Shop on South Tejon Street that he could be a salesman for Colorado Springs Utilities' incentive program.

And he's fine with that.

"You can still get an eight-, nine- or 10-year payback," Crandall says. "That means you're getting 7 or 8 percent return on your investment. ... And that will only go up as utility rates go up. It's actually the soundest investment that people can make right now, even with reduced rebates."

Although Utilities has doubled its rebate pot to $1.5 million from last year, it's lowered the incentive from $3 per watt to $2 per watt. The reduction is in line with other utilities' programs, says Springs Utilities spokesman Gabriel Romero. The Denver Post reported last week that Xcel Energy has asked state regulators' permission to drop its rate to $1.25 per watt.

Utilities officials say that since higher demand for solar cells has driven the cost down, energy companies should be able to lower their incentives. But Sam Masias of Colorado Springs, who works in the solar business, says the move "pretty much starves" the fledgling industry.

Last year, $750,000 was available in rebates. Homeowners grabbed up their share by February. Funding for commercial customers ran out in August. So far this year, only $322,000 has been reserved by 30 homeowners and three business customers, and officials predict the money won't be exhausted until August or September.

Even after five years, the solar program's impact on Utilities' overall power load is negligible. The 119 systems installed from 2006 through 2010 total just 700 kilowatts, or .7 of a megawatt, in a system with a generation capacity of 1,091 megawatts. That's actually less than what Utilities has achieved with rebate programs for such things as energy-efficient appliances, new windows and other conservation methods, which totaled 7.1 megawatts.

The city hasn't rushed into the solar arena because some Utilities Board members aren't wild about subsidizing solar power, which can cost up to four times as much to generate as coal, the city's primary energy source. But a program was developed in response to customer interest, Romero says, and it's one tool to lessen demand on power plants; Utilities estimates a new power source will be needed by 2020, but that date could get pushed back if usage declines.

Other cities are doing more, including Austin, Texas, whose larger size only partially explains the disparity. Its municipal utility has spent $4 million a year since July 2004 on solar incentives, and has issued rebates to 1,150 residential customers and 100 commercial users with installations that total 4.5 megawatts, says Austin's solar programs manager Leslie Libby. Just last week, Austin's City Council adopted a 2020 goal of having solar power account for 200 megawatts on its system, Libby says.

Masias says a small residential system of 3,000 watts would cost, at a minimum, $15,000. With Utilities' rebate of $6,000 and a federal rebate of 30 percent, or $5,000, a customer still has to shell out $4,000. Under the previous rebate of $3 per watt, the customer's out-of-pocket cost would have been only $1,000.

The recent cut here and elsewhere "has affected the industry," he says. "There's no doubt."

zubeck@csindy.com

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