Solar industry leaders and Xcel Energy reached an agreement Tuesday that will allow the utility to fund another $97 million in incentives for home and small-business solar installations over the next year.

The money should fund, on a sliding scale, 60 megawatts of new solar installations, said Xcel spokeswoman Michele Aguayo. The incentive will pay $1.79 per watt for the first tier applicants, stepping down gradually to nothing after 20 megawatts for residential projects. Small-business installations will make up the rest of the total 60 megawatts, Aguayo said.

The agreement came less than a month after the utility suspended its Solar Rewards program altogether in late February.

“It was one of our main objectives, to get to this agreement quickly,” Aguayo said. “Having everybody focused on it really helped.”

Xcel’s suspension of the Solar Rewards program in February has drawn ire, protest and unrest from the solar industries community, which said the loss of the incentive program could cost Colorado more than 3,000 jobs.

The utility suspended the program after it was inundated with applications upon announcing in mid-February that it would reduce its $2.35 per watt payout to $2.01 after accepting applications for another 3 megawatts at the earlier, higher rate. The utility received applications for all 3 megawatts within 24 hours of the announcement, Aguayo said.

It then suspended its program altogether while seeking permission from the utilities commission to cut payouts down to $1.25 per watt.

The new plan represents a compromise between the solar industry and the utility, Aguayo said.

“This gives us a roadmap,” Aguayo said. “It allows us to move forward in a predictable and hopefully judicious way.”

While the payouts are reduced, the program now has a structure so that those interested in installing solar and those in the solar industry will know what to expect.

“They’ll know that if they’re hesitant, there might be less money,” Aguayo said.

The $97 million should carry the program through the rest of 2011, Aguayo said. The 60 megawatts of new projects that this money will fund is in addition to the 43 megawatts that the utility is already committed to pay for, Aguayo said.

“That $97 million is within what we have felt Xcel and the ratepayers can handle,” Aguayo said.

The utility is allowed to collect up to an extra 2 percent on utility bills from the general public to fund renewable energy projects. Aguayo said the solar program had gotten so popular the fund couldn’t keep up.

“This is a lot of solar,” she said.

Altogether, the program will be committed to 103 megawatts of solar installation, which is as big as some of the largest public lands solar projects underway in the Southwest.

Even with diminishing returns from the Solar Rewards program, Aguayo said she expects to see applications pour in and would not be at all surprised if all 60 megawatts are claimed before the end of the year-long program commitment.

“I think we’re still going to see those people who are committed to solar applying,” she said. “People who are committed to it are really committed to it.”

The utilities commission still has to rule on the program proposal before it can be implemented and the Solar Rewards program can get back online. That decision is slated for this Friday, March 18.