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July 29, 2005

Solar Granted a Major Victory in Energy Bill

by Jesse Broehl, Editor, RenewableEnergyAccess.com
Washington, DC [RenewableEnergyAccess.com]

After years of effort, lawmakers on Capitol Hill finally agreed upon a vast package of federal energy legislation. For the average American, there are few, if any, items in the cavernous bill that will have an immediate and measurable impact on their lives. The first ever residential tax credit for solar energy in the past two decades, however, is chief among them.

"The one provision in the bill that all Americans can take advantage of right away is to install solar on their roofs."

- Rhone Resch, Executive Director of SEIA

With the Senate's approval vote today of 74-26 and a successful House vote of 275-156 on Thursday, the energy bill is officially on its way to the President's desk to be signed into law.

Despite the many proclamations from lawmakers that the bill could help lower gas prices and reduce U.S. dependence on foreign sources of energy, the bill will do little to alleviate either. And, it will offer few immediate or tangible benefits for the average U.S. citizen.

"If I was a homeowner and flipping through a newspaper story on the energy bill, I would get pretty depressed at the $14 billion of giveaways for industries that, frankly, are enjoying record profits," said Rhone Resch, Executive Director of the Solar Energy Industries Association (SEIA). "But the one provision in the bill that all Americans can take advantage of right away is to install solar on their roofs."

For the first time in two decades solar technologies were granted a federal investment tax credit that will promote all forms of solar energy. This includes solar thermal systems that provide for a home's hot water, photovoltaic systems that provide electric power, solar-hybrid lighting technologies and even to the commercial developers of industrial-scale Concentrating Solar Power plants of the likes that were constructed in the California Desert in the late '70s and early '80s.

Specifically, the bill increases the existing 10 percent investment tax credit for commercial solar installations to 30 percent for two years with no cap on the amount of the credit. This applies to all property placed in service after December 31, 2005 and before January 1, 2008; credit reverts to the permanent 10 percent credit thereafter.

What could have the most impact for typical Americans, the bill also creates a new 30 percent tax credit for residential solar installations for two years; capped at $2000; applied to all property placed in service after December 31, 2005 and before January 1, 2008. Likewise, all solar technologies will be eligible but solar thermal, and solar PV are expected to make the most gains.

"If consumers have been waiting for a tax credit for solar, now is the time to do it," Resch said. "It coincides perfectly with electricity and natural gas prices skyrocketing, and if you think prices will go down, you're mistaken."

A number of other provisions included in the final bill that will greatly benefit solar, including federal loan guarantees for large-scale "innovative technologies," government solar purchase authorizations and energy service performance contracts.

Other items that can have an immediate and tangible impact for consumers across the U.S. are tax breaks for investments in energy efficiency appliances and an extension of a $2000 hybrid vehicle tax break.

The solar tax credit may appear small in relation to the majority of the bill's focus on the traditional fossil and nuclear industries but it's a major victory for solar and possibly a sign of shifting attitudes towards solar.

"I can't emphasize how much this is a huge precedent for the solar industry," said Resch who added that fuel cells were the only other non-traditional energy technology to gain a 30 percent investment tax credit.

"I had folks from Exxon coming up and saying 'how did you do this' and 'you came out of left field,'" Resch said.

And how they did it was to intensely focus the solar lobbying effort like it's rarely, if ever, been done before. Resch said the solar industry has traditionally been a fractured industry, unable to agree on a specific and focused set of policy goals. He took lessons and experience he learned in his time prior to SEIA when he was Senior Vice President of the Natural Gas Supply Association. He knew if solar was to gain anything out of this energy bill they would all have to agree on one policy goal.

"People sometimes expect for us in the solar industry to come out with that fractured face," Resch said. "It was a massive team effort where the entire solar industry pulled together to make this happen. It was the singular massage, that's why we got the 30 percent."

Solar provisions that would benifit all forms of solar were not included in any of the previous congressional efforts to enact an energy bill. Resch said the inclusion of this credit shows recognition that Congress feels that solar is an important part of the energy mix and that they want to see it grow.

At least one Congressman aggress.

"The 30 percent solar credit for consumers is great news for this nation's future energy independence," said Congressman Charles Bass (R-NH), a key negotiator of the final energy bill. "This provision will one day be viewed as the most significant renewable energy policy shift in more than two decades. Consumers driving the industry to meet high expectations and pushing the nation toward self-reliance will produce far greater results than other incentives aimed at producers and utilities."
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Reader Comments (14)
 
No image available
July 29, 2005
A step in the right direction. I'll use this to get my solar hot water next year.

Lets use this great 'joining of forces' to keep the focus on renewables on the state and local levels.
Comment 1 of 14
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July 29, 2005
I just wish the limit were more....way to go.
Comment 2 of 14
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July 30, 2005
I agree with Adrian Akau. The energy bill is shameful. They didn't even include a provision to increase vehicle MPG...unbelievable!

However, trying to look at the glass being half full, at least solar made some small headway. Keep up the concerted lobby effort! I will do my part by installing solar water and PV and get the tax credits.
Comment 3 of 14
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July 30, 2005
It seems that our energy bill is not going to solve our energy problems.

Continuing to give tax breaks to oil companies already making great profits is a waste of tax dollars and shows a depth of irresponsibilty toward the voters that is difficult to comprehend. Are our lawmakers acting in good conscience?

What I think is needed are senators and representatives who will demonstrate un-corrupted thinking in the legislation that they are approving. This energy bill stinks.

adrianakau@aol.com
Comment 4 of 14
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July 31, 2005
Before we start patting ourselves on the back doesnt anyone realize that the $2000 cap on residential systems will just about cover the recent price increases in the cost of PV modules?
It seems like we're no further ahead that we were with the 10% $1000 cap situation before the increase in PV costs. With no cap in place, businesses might be able to take better advantage of this "development".
Comment 5 of 14
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August 1, 2005
A note that the existing permanent 10% credit was for commercial (and not individual residential purchases of solar only;) the current commercial credit has no cap, as is made clear in the article. The situation you mention for comparison is therefore not valid.

The cap only applies to residential systems, as essentially an anti-fraud measure.
Comment 6 of 14
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August 2, 2005
In spite of the long overdue credits for solar energy, not seen since Reagan ended them in the 80's, the focus still tends to be on production and not conservation. Missing are the much needed increases in the average gas mileage for automobiles, something that would do wonders for eliminating our need for foreign oil. But then the billions of $$ of corporate give-aways added to the bill at the last minute, especially the one that DeLay put in at the very end which gave $1.5B to companies his district with the caveat that they must be a consortium. This included Haliburton and the consortium did not exist until about the beginning of 2005. The bill does not seem to recognize the issue of Peak Oil almost as if the administration and its supporters are purposefully ignoring it so that they can have an excuse to create other invasions in order to protect our energy suppies and exert control over other countries.
Comment 7 of 14
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August 2, 2005
The residential tax credit may not be as much as we wanted, but it's a start. It's true that the $2,000 cap will probably only cover the cost of PV panel price increases in a large system. However, the credit will reduce the cost of a solar thermal system by 30%. With the credit, a $3,500 batch system will cost the consumer only $2,450. This reduction in cost to the consumer is significant and may help increse solar thermal sales. A $1,050 credit is significant to many people. It just may be enough to get them to buy this time.
Comment 8 of 14
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August 9, 2005
The renewable energy portion of the energy bill should assist growth in the area of solar thermal for residential installation. The $2,000.00 residential limit appears intended to drive growth in this direction as it's not large enough on it's own to encourage use of PV. Given the current shortage of chip and PV grade silicon the $2,000.00 limit on residential support during 2006-07 appears well thought out.
The unlimited 30% support for commercial installations may be more problematic over the next two years. It's possible that this limited 2 year window will drive demand more than the bill intended.
We currently have a 2005 market where all PV manufactured worldwide is consumed. I don't think we completely understand how a new, unlimited, 20% discount will affect prices and product availability.
Comment 9 of 14
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August 15, 2005
Great news, a federal tax credit for PV....
So what do I tell my customers under contract for PV installations this fall??? I can't afford to send much of the work to next year, but if I don't, they'll miss out on $2,000 from the Feds. Who else is dealing with this mixed blessing, and what is your solution?
Comment 10 of 14
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August 21, 2005
although I thing it's stupid that there is no reduced MPG standerds, and the handouts to oil compaines, the new energy bill turned out a lot beter than it could have. With republicans controling all 3 branches of government I would expect lax environmental policies and hadouts for American car and energy companies, but at least the minority party managed to get some potentially significant victories for alternate energy incluided in the bill.

The benefits for comercial solar energy may make it cheap enough for those big greedy energy companies to pull their heads out of their asses and finally use solar energy as more than a publicity stunt, and the 30% residential rebate should allow me to finnally afford some solar panels for my house.

The bill doesn't show any real change in our government's attitude towards conservation and renewable energy, and it isn't all good, but it's more that I'd expect from the republican controled legeslature.
Comment 11 of 14
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August 22, 2005
Christopher...

There is a simple way to solve your problem. Just install the solar panels but don't connect them and instruct your costomers that if they want the tax brake they just wait until new years and connect it themselves. That way you won't be behind scedual, and your costomers can choose to get $2000 from the feds as long as they don't mind doing the final swiching on of their PV solar panels.
Comment 12 of 14
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September 7, 2005
i think this bill is worthless for the average homeowner. We struggle to make ends meet and prices just go up and up. I have old solar panels from the 80's on my house. I don't know how to work them and have gotten no where for someone to show me. unless I pay them 60 dollars to come to my house and 130 dollars an hour after that. I am trying to save money by running my solar not spend more. I am trying to be a good citizen and am trying to use my solar but I am getting no where and getting fed up with dealing with our goverment. no body is thinking about the little guys in the world.
Comment 13 of 14
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September 17, 2005
Hi to all,

Nine days later and no one has answered Gretchen's question.

Where are the instructions for her to use her old solar panels?

Gretchen, your decision not to use professional service people is costing you money each month!! Work out a payment plan or something!

Get your system online or just sell your system to someone who can use it!!
Comment 14 of 14
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