Sun could set on solar tax credits sooner than anticipated

Sun could set on solar tax credits sooner than anticipated

At least eight different bills filed ahead of the 2015 legislative session propose rolling back refundable tax credits for solar power systems. Solar advocates say that would effectively shut down the industry in the state, while critics argue the credits are too costly.

"This system is creating roughly $95 a month in electricity for this customer," Craig Page said while looking over a recent install.

An electrical contractor by trade, Page now makes his living off solar. He co-founded Optimize Solar after the state created a tax credit in 2008 that reimburses homeowners for half the cost of a $25,000 solar panel system. A federal credit reimburses another 30%. Optimize has since installed around 250 systems in the Baton Rouge area.

"That's going to save a little over $10 million over the next 30 years for local Louisiana residents, and that's money that's going to be put back into the system, the Louisiana economy," he said. "A 2013 study showed for every dollar spent, the state gets $1.08 back in tax revenue."

It seems like a win-win: clean, renewable energy saving some 15,000 Louisiana households money, while creating jobs at the same time. But that's part of the problem. The solar credits are too popular, costing the state much more than originally anticipated.

In 2009, the first year of the program, Louisiana refunded $1.5 million in credits. That number was up to $24.3 million by 2012, then $61.1 million last year. Some of the money goes to companies that lease solar systems to homeowners, which some say has significantly fueled growth.

The solar industry noticed the trend and negotiated a compromise with legislators in 2013. A bill sponsored by Erich Ponti (R – Baton Rouge) closed loopholes in the credits and set up a complete phase-out by 2017, giving businesses time to adjust.

Now facing a budget crisis, Governor Jindal's proposed budget would make 12 different credits non-refundable, including solar. Some legislators want to accelerate the sunset date for the credits to July 1, 2015.

Rep. Ted James (D – Baton Rouge) sponsors one such bill, arguing that this session should be about priorities.

"We've asked everyone else, from our college students to our teachers to those in the healthcare profession to give a little, and it's time for us to reign in some of our corporate giveaways," he said. "A lot of my bills this year are geared toward reigning in."

Page said an earlier sunset on the credits would put him out of business.

"It goes form a long-term plan or a couple-year plan to a couple-month plan. You make different decisions," Page said.

The Gulf States Renewable Energy Industries Association estimates 1,200 jobs would be lost at a time when the industry is expanding. James said that's fewer than what should have been created.

"Louisiana ranks sixth lowest in terms of solar job creation, so to me that shows that we're not truly getting our bang for our buck with that credit," he said.

James also pointed out the problems with those companies that lease systems and pocket the credits.

"What we're finding is that some of their bills have been inflated. There's been large amounts of fraud and abuse," he added.

Page does not lease his systems, and hopes he won't suffer for the actions of others.

"The tax credit is doing what it was designed to do," he said. "We just hope that they'll work with us and not throw the baby out with the bath water."

Session begins on Monday, April 13.

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