Solar Credits the Silver Lining
of Economic Bailout Bonanza
What a country! For the past two years, as the December 2008 deadline for solar tax credits loomed ever larger and the fate of our incipient solar industry hung in the balance, every attempt to extend the credits and give full support to the development of solar technologies was beaten back by oil-friendly legislators and a political process that treated Global Warming as a liberal catchphrase rather than an urgent national priority. Then the economy melted down, not because of rising temperatures but because of feverish attempts to stem the disastrous effects of sub-prime mortgages and toxic securities. An initial bailout bill, to the surprise of most everyone, was defeated in the midst of the general public revulsion from years of mismanagement, Wall Street greed and a carte blanche for the Treasury Secretary to spend 750 billion dollars without oversight, transparency or accountability. The stage was set for some good old-fashioned Congressional horse-trading.
Luckily for us, one of those horses was the package of solar incentives that, unable to pass on its merits when the opposition was focused on defeating it, did manage to get through as part of the stampede of “sweeteners” added to version two of the bailout. By any measure, this is a ridiculous way to craft our Energy policy—but at least we can breathe a sigh of relief that a much-needed measure has finally been enacted. In dismal times like these, any ray of sunshine is welcome, especially if it not only illuminates but also provides power!
So here is what the relevant provisions of the Emergency Economic Stabilization Act of 2008 actually accomplished:
- Extension for eight years of the 30% tax credits for both commercial and residential installations
- Elimination of the $2000 monetary cap for residential solar electric installations (effective for property placed in service after 12/31/08 ), creating a true 30% tax credit
- Elimination of the prohibition on energy utilities from taking advantage of the credits
- Allowance for Alternative Minimum Tax filers to benefit from the credits ( a substantial increase in eligibility)
- Authorization for $800 million dollars in clean energy bonds for renewable energy generating facilities, including solar
One particularly important effect of the passage of these measures is that they end the pall of uncertainty that has been hanging over the Solar Industry after two years of extremely healthy growth that followed the original passage of the credits in 2005. Solar installations in 2007 doubled those in 2006. The Solar Industry has been in the process of moving from a small cottage industry to a major engine of economic growth—but without a clear policy extending the credits, future plans and future investment have all been on hold.
Tne study, by Navigant Consulting Inc., estimated that passage would create 440,000 new jobs and stimulate the investment of $325 billion of private investment in the solar industry—and this without figuring in the reversal of the $2000 cap on home installations. Since manufacturing and installation jobs tend to be created near the areas where they are needed, this will add significant opportunity for those new—“green collar” workers who can help to restart our deeply troubled economy. In addition, the provision that allows utility companies to take advantage of the tax credits means that an estimated 27 utility-scale solar projects that have been in suspended animation around the country can now move forward, and that larger utilities will be able to consider solar alternatives without the reservations caused by the political jockeying of the past year.
Speaking of utility-scale solar projects, if you are reading this before November 4, you still have a chance to vote against a poorly conceived one in the form of Proposition 7. You can also vote against another measure that similarly uses green concerns in a way that has been roundly opposed by most leaders in the environmental community, Swift-boater T. Boone Pickens Natural Gas initiative, Proposition 10. Essentially, 10 uses five billion scarce California dollars in 30-year bonds that would serve as a kind of in-house subsidy for natural gas vehicles that benefit Pickens and don't deliver the environmental benefits promised in his well-financed ads. Joining many others in opposition, the Natural Resource Defense Council, the Sierra Club, the Union of Concerned Scientists and the California League of Conservation voters all got together in mid-October to hold press conferences in both Northern and Southern California to urge voters to vote NO on Proposition 10. If you are reading this after November 4, you'll know whether voters were able to see through the “greenwashing” of both these measures, that used the initiative process to push programs rejected by most sophisticated environmental policy analysts.
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