We see this all the time in the solar industry: a state is a booming epicenter of solar installations due to strong financial support from the government. Then funding gets cut or depleted, solar installations drop, solar installers lose their jobs, and the state loses its pride of place in the market at large. Connecticut, New Jersey, Massachusetts, Florida, and New York all spring to mind.

But sometimes there’s a pendulum swing back to the other side: New Jersey is the most blatant example, and maybe, just maybe, New York will catch up to its neighbors. The state announced yesterday a new five-year, $279 million commitment for small-scale renewable energy projects.

While changes to the current solar energy rebate structure have not been announced, the industry is pushing for a higher rebate level. Formerly as generous as $3.50/watt, the rebate dropped to $1.75/watt in funding cuts last year as an interim amount until the state’s public service commission could determine a new clean energy budget. Rebate levels of at least $2/watt would be a welcome boost to the state’s flagging solar sector.

Incredibly, NYSERDA continues to assert that the $1.75/watt rebate and loss of low-interest financing have put the state’s solar market on par with its “neighbors”: since presumably they mean New Jersey and/or Pennsylvania, this is an outrageous statement. New Jersey’s rebate is indeed $1.55-1.75/watt for home solar, but that’s coupled with the state’s extraordinary and so far unique SREC program. New Jersey is the fastest growing solar market in the country, and well-designed systems can pay for themselves in just a few years. New York can in no way say the same. And in Pennsylvania, the rebate is currently at $2.25/watt and the state has highly consumer-friendly net metering standards.

The new clean energy funding includes, for the very first time, a provision for solar hot water installations to the tune of $24.7 million. Other brackets include $144m for solar PV, $70.5m for anaerobic digesters, $21.6m for fuel cells, and $18.1m for small-scale wind.

A simple rebate structure may not be enough to spur the state towards meeting its goal of 30 percent renewable energy in just five more years. In California, home solar rebates have been so effective on their own partly because consumers can save a disproportionate amount of money with solar due to tiered electric rates that go as high as about $0.45/kWh. And state funds are not necessarily sacred, as New Jersey is finding out (again), as new Governor Chris Christie’s energy budget cuts slash the work done by his predecessor Jon Corzine–but because the SREC program in Jersey is market-based, the bulk of solar installations will still continue to be financially feasible.

Not to end on a sour note at all, though. This new funding commitment from the state of New York will re-invigorate the clean energy economy within the state and once again make it possible for home and business owners to pursue solar as a sound financial investment, in addition to an investment in a cleaner, healthier future. And let’s hope Governor David Paterson means it when he says,

Resources, predictability and sound implementation are the key ingredients to a successful clean energy program…It is now imperative that the Commission staff and NYSERDA work together to administer the newly designed programs in a way to ensure market stability for years to come.