The president of the Solar Energy Industries Association (SEIA) is promising to fight for the continuation of a 30 percent federal income tax credit (ITC) for solar equipment beyond its scheduled expiration at the end of 2016.
Speaking to the opening session of the Solar Power International trade show in Las Vegas on October 20, SEIA President and CEO Rhone Resch said the SEIA would lead the “Extend the ITC” campaign to keep the tax credit at its current level.
He said the campaign would gear up in 2015 when a new Congress is sworn in, and told attendees that their livelihoods depend on the outcome.
A single utility-scale wind turbine was installed in the U.S. in the first half of 2013, he said, because of a panic over the Production Tax Credit that helped build that industry. Thirty thousand jobs in the industry disappeared.
“Don’t kid yourselves,” he said in the text of his remarks. “It can happen to solar, too. This isn’t the time to roll the dice on your future. You need to get into the game.”
Generous tax credits helped the oil industry
The tax credit covers a number of renewable energy investments, including not only photovoltaics, but wind, solar hot water, ground-source heat pumps, and fuel cells. For solar-electric systems put into service after 2008, there are no maximums on the size of the systems that qualify.
The tax credit has helped the solar industry grow from $800 million a year to $15 billion a year since it first took effect in 2006, Resch said, with more solar equipment installed in the U.S. in the last two years than in the previous 38 years combined.
Resch said that the average annual subsidy for the oil and gas industry has been $4.8 billion, compared to the $370 million for all renewable technologies. “I ask again,” he said, “How is this fair?”
“Today, I’m going to make you a promise,” he continued. “As sure as World War I started in 1914, if the Koch Brothers and their allies come after solar, 2014 will be the beginning of World War III. It’s not going to be easy. And, yes, we will be fighting an uphill battle every step of the way.”
Although the tax credit has only been on the books since 2006, he said, it has helped drive down the cost of rooftop PV installations by more than half and reduce the cost of utility-scale projects by 70 percent. Annual solar installations in 2014 will be 70 times higher than they were in 2006, he said.
“The best is yet to come if we just stick together and work together to keep the ITC in place,” he said.
“No clear consensus” among lawmakers
The solar industry’s future may hinge on the success of the campaign. But, writes Thomas Jensen at Greentech Media, there is no consensus among legislators that it should be retained, while the investment community has its own qualms.
Jensen, the managing principal and director of finance and capital markets at City Power Development Group, argues that institutional investors have been slow to embrace renewable energy tax credits, in part because they don’t have the long track records of other tax credit programs.
More important, he said, big investors “don’t like orphaned asset classes, and they don’t like orphaned vendors. In other words, they’re not in the business of making one-off investments in one-off asset classes that are soon to go away with one-off, one-time vendors that may not be in business in two more years.”
The “panicky claims” by the solar industry that it won’t be able to survive without the tax credit is actually a hindrance, not a help.
“So with the solar industry caught in a Catch-22 partly of its own making,” he writes, “it appears the only solar developers likely to garner the attention of institutional investors during the final two years of the subsidy will be the ones able to make compelling arguments that they will survive the subsidy’s elimination and remain able to asset-manage these long-term investments.”