Solar incentives could shrink or even go away altogether in states grappling with budget shortfalls.

Maryland is the latest state to run out of money to fund a popular program that provided as much as $10,000 to home or business owners installingsolarenergy systems, the Baltimore Business Journal reported Tuesday.

The state actually ran out of the money last July and decided last month to cap the number of people on the waiting list to 412. Like other states, Maryland is struggling to come up with new statewide budgets in a depressed economy.

Solar incentives have grown in popularity among state and local governments trying to promote clean energy production. States that offer rebates or other types of goodies for installing solar-electric systems typically also have regulations that require their utilities to provide a certain amount of electricity generated from renewable sources such as solar and wind.

A growing number of states have been surprised by how many people have taken up their offers to help defray the expensive cost of buying and installing a solar power system, which could cost tens of thousands of dollars for a home.

Connecticut also is running out of money for a solar rebate program. The $8.5 million set aside for residential installations was supposed to last from July 1, 2008 to June 30, 2010, but the coffer emptied by the end of 2008. The states expect the $18 million set aside for commercial installations to run out this spring.

Connecticut, too, is trying to come up with a statewide budget that would inflict the minimal pains to its denizens. It's facing a $6 billion deficit, which will make it difficult for state lawmakers to infuse ample money into the solar rebate program.

"We won't know what we will have available [for solar rebates] for the next several months," Donna Tommelleo, a spokeswoman for Connecticut Gov. Jodi Rell, said Tuesday. "Like every other state, everybody is hurting."

New Jersey is another state that was surprised by how popular its solar incentive program has been. Last July, the state's Board of Public Utilities ended almost the entire popular solar rebate program after seeing a long waiting list of applicants for money to buy and erect solar energy systems (see Big Renewable-Energy Subsidies Backfire). 

The rebate program will continue for installations at 10-kilowatt or smaller, however, said Doyal Siddell, a spokesman for the board.

California, which also has a rebate program called the California Solar Initiative, isn't facing budget problems, said Susan Carothers, a spokeswoman from the California Public Utilities Commission, on Tuesday.

Instead of offering rebates, some local governments are looking at other types of incentives to promote solar power. The City of Berkeley, for example, has launched a loan program in which property owners would pay the city back through property taxes (see Berkeley to Finance Solar Installations).

The city of Gainesville, Fla., on the other hand, is set to vote on a program this week to create the country's first feed-in tariff program that would allow participants to make money by installing solar energy systems.

The program would pay both residential and business customers 32 cents per kilowatt hour for power generated from their systems. That's more than the price of conventional electricity. The city plans to launch the program in March (see Gainesville to Launch Solar Feed-In Tariff).

"The biggest flaws for rebate program is you don't have to perform to get paid," said Mike Antheil, executive director of the Florida Alliance for Renewable Energy (FARE).

Supporters of the Gainesville program are pushing for Florida to pass a statewide feed-in tariff program. FARE and other solar industry groups are holding a one-day seminar on Feb. 3 in Tallahassee to drum up political interest in supporting a statewide feed-in tariff policy.

Some states, such as California, have programs in place that allow owners of solar energy systems that generate more power than they can use to feed the excess power back into the grid. They don't get money back though. Instead, they will see a deduction on their next electricity bills, a practice commonly called net metering.