2013 Solar Tax Credit Changes and Why

2013 Solar Tax Credit Changes

Best in the nation, still – Louisiana has enjoyed the “best in the nation” solar tax credit since 2008.  Even today, with all the talk about the tax credit going away, you can get 50% back, up to $12,500 on your solar power system.  The Louisiana residential tax credit will expire on December 31, 2017,  While this is amazing, and an offer nobody should pass up, we should look at what we had before 1/20/13 and the truth about why it’s gone now.

What did we have? – Until January 20, 2013, Louisiana residents had the unlimited ability to purchase a solar power system to meet (but not exceed) their needs and receive the state tax credit for 50% of that purchase.  This allowed larger electricity users to size their system (or systems) to meet their needs and still receive the tax credit on the total.  With the “uncapped” law and rules, the average system size was $30,000 (taking the Department of Revenue residential numbers and dividing the total dollars by the number of credits).  This showed that the arbitrary value of $25,000 per system set in 2008 was a little off from what homeowners needed.  The original tax credit law and rules allowed for this.  Market conditions, lending institutions and customer needs were all being met.  So we went from “meeting, but not exceeding your needs”, to now one total, lifetime $12,500 capped tax credit.

How did that get so screwed up for all of us? – In a nutshell, the leasing companies and “their” industry voice, a trade group in New Orleans, got us where we are now.  It started with a clever loophole in the homeowner tax credit law by Rep. Erich Ponti, paving the way for TPO  (third party owner) corporations.  After the loophole was opened in 2010, the New Orleans “industry” voice formed (10/18/10) and soon after, two leasers started in 2011 with their plan/scam.  They would have poor homeowners sign over their $12,500 tax credit to the corporations, have a lien put on their house, while agreeing to pay $50-$60/month for 15 years and in turn get a small system installed, which may or may not lower their bills by that much.  Hundreds to thousands of these TPO tax credits began to be filed with the Department of Revenue.  Unfortunately the excess payouts caught the attention of the media, and the Department of Revenue.

In the spotlight – When news articles began surfacing about the solar tax credit, the Department of Revenue began to look for a way to reduce the lost state income.  Like clockwork, the New Orleans “industry” group was more than eager to assist them.  In no time the “industry” group pointed the finger at homeowners that received multiple tax credits as the runaway tax credit problem.  This makes no sense as the average multiple system credit was 1.2 “systems” (or $30,000 average total system yielding a $15,000 credit to the homeowner).  The sales tax credits totaled only 25% of the entire state payout while the corporate leasers received 75% of the money.  The “solution” provided by the New Orleans “industry” group (while working closely with LDR to revise the rules) was to eliminate multiple systems.  This was a devastating blow to the majority of solar installers while letting the TPO corporations to continue with their fleecing of the state, unrestricted.  When word got around to the legitimate industry professionals it was too late to stop LDR.  Our industry professionals were only able to postpone the effective date to 1/20/13.

Meanwhile the leasers laughed, as the problem of “multiple systems” had no effect on their plan.  In fact, there was even wording to eliminate tax credits for “ground mounted systems” unless they were more than 8 feet high at their lowest point!  This was so blatantly obvious that it was written to stop the residential solar industry practice of proper ground mounts and only allow “carport structures” which the TPO’s were putting in on apartment complexes.

The 2013 Legislature – The New Orleans “industry” group, now under complete financial control by the leasers, provided Rep. Ponti with a bill that proposed cuts to our tax credit that (on the surface) appeared as though the industry was making sacrificial cuts.  In actuality, the proposed cuts were to anything “outside” of the leasing model.  When solar companies began questioning what was going on in the legislature, they were told to “sit back and don’t talk to anybody, everything is under control”.  This “industry” group proposed to: remove wind system credits, remove apartments, require systems to be “on” or adjacent to the residence, make it one system only(solar electric or solar thermal), enhance the TPO language for leasing, offer cutting the credit to 35% in 2018 (and gone by 2020), limit solar thermal credit to $10,000, allow “no cost energy audits”, and more.  As you can see, it is a playbook to further hinder residential solar, while allowing unlimited leasing.  The disaster  was well hidden inside the Trojan Horse that was pushed into the doors of our capital.

A true “industry” group would have simply identified the fact that now 75% of all tax credit payouts are going to leasers, while the leasers can be counted on one hand (UPDATE – one closed their doors and two remain).  The leasers have operated without being questioned on their tax credit invoices to the state.  The leasers have been operating without licences as required by the state contractors licensing board.  The leasers have targeted the poor, which has raised the eyebrows of the NAACP.  The leasers have investigative reporters linking several of them to the house raising scam in New Orleans.  The leasers have operated using Chinese modules which have recently been in the news for failures, fires, and import tariffs being required (and possibly not being paid).

Fortunately, before it was too late, a group of unrepresented solar industry professionals rallied to the capital to put the brakes on the runaway problem.  By becoming “effective unpaid citizen lobbyist” (a quote from a legislator) they were able to meet with lawmakers, provide solutions, testify before committees and do everything they could to stop what had been put into motion.  This motion would have been the final nail in the coffin of the residential solar market, outside of leasing.  This new industry group has decided to become official so many good things are about to happen.  Hopefully some of the damage can be reversed from the leasing industry voice.  I look forward to being a part of it.

If you were fooled into thinking the solar industry had a voice from the leasing group than simply ignore the “words” that came out of them and only look at the “actions”.  Then it becomes perfectly clear the motive, opportunity, and result.  Many were tricked, and a few still are.  So now you know about the 2013 solar tax credit changes and why they were made.  For more information contact me at Gulf South Solar.

Jeff Shaw
NABCEP Certified installer
Gulf South Solar – since 2003