Solar Industry Demands Extension Of Subsidies

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Peter Fricke Contributor
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The solar industry rallied supporters on Friday to pressure government officials to extend tax credits and regulations designed to promote the use of solar energy.

As part of the second annual “Shout Out for Solar” Day, sponsored by the Solar Energy Industries Association, hundreds of thousands of people are expected to participate via social media to “send a loud message to legislators, regulators, and policymakers about the importance of solar to America’s future.”

According to SEIA, the solar industry grew at a record pace in 2014, reaching a capacity of about 20 gigawatts, or enough to power about 4 million homes. It outpaced the growth of any other renewable energy source. Currently, they claim, “the solar industry employs 143,000 Americans and pumps more than $15 billion a year into the U.S. economy.” (RELATED: Solar Energy Will Produce Less Than 1 Percent of US Power in 2015)

The industry’s success, the SEIA asserts, “is due, in large part, to smart and effective public policies, such as the Investment Tax Credit (ITC), Net Energy Metering (NEM), and Renewable Portfolio Standards (RPS).”

NEM laws, which are enacted at the state and local level to incentivize small-scale power generation facilities like rooftop solar cells, allow individuals to sell any excess energy they create back to the electric utility at the prevailing market rate.

RPS laws, on the other hand, seek to encourage renewable energy production, not through market incentives, but rather by mandating that electric companies derive a certain, minimum percentage of their supply from renewable sources.

Of far greater concern to the solar industry, though, is the federal ITC, which provides a 30 percent tax credit for solar systems on residential and commercial properties. According to SEIA, the ITC “has helped annual solar installation grow by over 1,600 percent” since it was first implemented in 2006.

In 2008, SEIA successfully advocated for a multi-year extension of the ITC, but with that extension set to expire in 2016, the industry believes it must “dramatically step up our efforts to shine a bright light on the amazing success of solar energy in America.” (RELATED: Europe’s Green Energy Industry Faces Collapse as Subsidies are Cut)

In a letter sent to the Federal Trade Commission in December, Arizona Republican Rep. Paul Gosar acknowledged that “regulatory subsidies” at the state and federal levels have contributed to the “surge” of the rooftop solar market in recent years, but concluded that the industry’s gains have come at least partly at the expense of consumers, not to mention taxpayers.

Some companies that lease solar systems to consumers, Gosar wrote, “are actually acting as sellers of financial products, leveraging the federal ITC and applicable state renewable subsidies … for the purposes of turning a profit.” (RELATED: Report: US Green Energy Subsidies Jeopardize American Companies, Global Markets)

Because government subsidies ensure profitability, he explained, those companies are able to offer homeowners “zero-money-down leases, essentially teaser rates, for a 20-year lease agreement,” thereby locking those customers in to contracts they do not always fully understand.

With the impending expiration of the ITC, pressure is growing on those companies to sign up as many customers as possible before 2016, leading some to reportedly resort to “deceptive sales tactics,” such as overstating the potential savings of installing solar panels.

To make matters worse, the duration of such leases typically “exceed both the life of the roof and duration of the lessor’s home ownership,” forcing customers to use their homes as collateral. As a result, Gosar says, there are already numerous reports that “homeowners who have signed these zero-money-down leases are struggling to sell their homes.”

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