Jamie Hahn, Managing Director, Solis Partners
One of the most difficult issues facing the solar industry over the past year has been uncertainty in the marketplace due to changing public policies and reduced incentives at both the federal and state levels.
Just as the United States solar industry started picking up steam, the Section 1603 Treasury Grant Program expired, reverting back to an investment tax credit. While some companies where able to qualify projects under the program’s “safe harbor” provision, allowing them to stay busy through the first half of the year, new solar project development and investment has started to shrink due to the lack of supply of tax equity in the market.
Additionally, the 100 percent bonus depreciation allowance was reduced to 50 percent in 2012, and will revert back to the standard MACRS schedule in 2013. This will further impact investors moving forward.
At the state level, specifically in New Jersey, the state’s Solar Renewable Energy Certificate (SREC) market, which is a major financing mechanism for solar projects, took a precipitous drop, making it even more difficult to get projects financed. This was due to an overbuild scenario in which the state surpassed its Renewable Portfolio Standard (RPS) mandate. While legislation has recently been passed to stabilize the SREC market, SREC prices have been depressed for more than a year.
The key to making sure the solar industry remains active is transparent and long-term public policy at both the federal and state levels — at least until solar reaches grid parity. Fortunately with decreasing installed costs, along with the high electricity prices in some states like New Jersey, that’s not too far away. However, for much of the country consistent policies that offer incentives for installing solar are extremely important.
Jamie Hahn is co-founder and managing director of Solis Partners, a leading provider of solar energy systems. Solis develops, designs, engineers and constructs solar power systems for the commercial, utility and non-profit markets. Solis offers a variety of project finance structures.