This morning I was asked to respond to the claim solar tax credits are a bad thing for our state and our country. Bill Profita (Talk 107.3 FM) invited me to respond to the comments by David Williams, the President of the “Taxpayer Protection Alliance” out of Washington, DC. His focus is on government waste, which is good, but he includes all solar subsidies in wasteful spending.
I did not get to get to debate Mr. Williams directly, nor did I get to 95% of what I wanted to say, but if I could have, this is what I would have said……
When the Louisiana legislature created the solar tax credit in 2008 it was to encourage renewable energy, solar in particular, and it did. At the passing of the tax credit there was only one residential installation company, mine, Gulf South Solar, then new ones opened statewide at a rate of about 1 per week! They hired employees and set up shop. Many are still around today.
Solar gives the homeowner an alternative to purchasing power from a monopoly, the utility, with a long-term investment in a solar power system. They have nowhere else to purchase.
By encouraging solar installations with tax credits, more companies formed and volume increased, so prices dropped, as you would expect. In fact, a typical 7.5kw system installed today which costs $25,000 before credits, cost $75,000 before the tax credit. (From $10/watt to $3.30/watt)
Economist Dr. James Richardson determined that for every $1 paid out in credits in LA returned $1.09. I ran the numbers myself on a current completed job and came up with $13,750 spent back locally, which is $1.10 per $1 paid out to the homeowner in credit. This is taking into consideration my purchases for panels and inverters from California. Some installers purchase everything locally raising that number even higher.
With around 90% of Americans supporting solar I find the few against are either misinformed, utility supporters or employees.
The 2008 state tax credit came at a good time for contractors facing the recession. Many were able to switch from electrical, roofing, insulation or HVAC work to installing solar systems, since homebuilding was hit the hardest.
The tax credit allows 50% of my customers to get a battery-backup system which gives them power after a storm or outage. This is extremely important when you have hurricanes with the frequency we do. There is nothing better than having an emergency backup of solar power rather than relying on a generator.
Solar technology is constantly improving. Not only has efficiency gone up but price has gone down steadily. The inverter technology now allows for what we call “Grid-Zero”. A home can be fitted with panels, inverter, and batteries, and the utility grid becomes the backup power source to the solar powered home! I know for a fact this works, since I installed it in my home last year.
With the economy getting worse in 2013, solar companies agreed to reduce the tax credit and end it in 2017. The 2015 session has already 12 bills pre-filed to end the tax credit immediately. Representative Ponti will push for a 20% additional reduction of the solar tax credit to become effective immediately and eliminate leasing. Our solar industry (minus the leasers) is behind him.
Mr. Williams and I agree that the leasing of solar systems by homeowners from corporations is a problem. He wants to throw the “baby out with the bathwater” when he says to get rid of all solar tax credits. Surely he is talking about the corporate tax credit for residential solar used by the solar leasing companies. Leasing became a problem with the tax credit when a loophole was opened inadvertently in 2010. I’ve written many articles on this subject but the main point is we dealt with it in the 2013 session, and have it tapering out by 2015. To briefly sum it up, some questionable individuals without solar backgrounds or interest formed with the intent of getting lower income folks to sign over their tax credits. They subbed out everything and operated without licenses until they were caught. The good news is that they are on the way out and we have kept the national leasers like Solar City and the like from moving into our state.
Mr. Williams thinks that solar on a home devalues it but he is confused. That only applies to leasing. Home appraisers ADD value to the home in one of several ways. They either add the full retail cost, depreciate the inverter over 15 years, or add 10x the annual utility savings at a minimum to a home’s value.
Mr. Williams is also wrong in that he thinks it solar does structural damage to a home. Solar panels have been bolted on rooftops for decades without problems, when installed correctly according to manufacturer’s instructions. Typically they are bolted to the rafters and the penetrations are flashed with metal for waterproofing. We haven’t had one leak ever. The total weight added is under three (3) pounds per square foot, which is minimal. They are designed to meet local wind code requirements.
Let’s look at Tax breaks another way. How smart is this?
Let’s say I wanted to be a “One Man News Headline Generator”. I could form a non-profit (501 C 6) to legally dodge taxes. If I run my $100,000/year income through the non-profit, then I provide NO STATE OR FEDERAL TAXES. That is correct. All donations to me become tax deductible, and I pay no taxes! Oh wait. That’s what Mr. Williams does now.