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Topic - Alternative Energy
Subject - Budget cuts trigger early end to solar energy credits

August 31, 2011
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Budget cuts trigger early end to solar energy credits

California homeowner Jim Adams, right, installed solar panels on his roof -- saving $10,000 thanks to tax incentives.

California homeowner Jim Adams installed solar panels on his roof -- saving $10,000 thanks to tax incentives.

By Jim Roope, CNN Radio

August 30, 2011 10:46 a.m. EDT

 

Los Angeles (CNN) -- If you've ever thought, "One day, I'm going to put in a solar energy system," today might be the day.

Economic issues across the nation are contributing to the early demise of solar incentives such as tax breaks, grants and rebates.

"We've been thinking about this for several years," said California homeowner Jim Adams.

"The cost wasn't really coming down, so we went to the bank, asked for a loan and decided to get it done."

So Adams had a 16-panel system installed on his roof in La Crescenta, California, about 15 miles north of Los Angeles.

He received a 30% tax credit from the federal government and a 10% cash rebate from the state.

It cost him $16,000 -- a savings of $10,000.

This year, a federal 30% cash rebate through the U.S. Treasury Department comes to an end. And the 30% federal tax credit program will conclude at the end of 2016.

These incentives, created as part of the federal stimulus package a few years ago, were designed to create a vibrant solar energy market. Along with the federal program, 29 states offered incentives. Many of those state programs are also becoming victims of budget cuts.

In Florida, Michael Hoffman, a taxation professor, hoped that between the federal tax credit and the state rebate, he'd be able to better afford a solar energy system.

But a computer error in the state's application process actually cost him $20,000 more than he had planned on paying.

Hoffman blamed "poor record-keeping" on the state's end.

"They took more applications than they had money for," he said.

"If we'd known that our cost was going to be $33,000 instead of $13,000, that would have been a fairly hard one to sell to ourselves just for the ecological, environmental warm and fuzzies."

Sales of rooftop solar panel installations jumped 67% last year, compared with 2009, according to the Solar Energies Industry Association.

Now, those sales are starting to drop because of state budget cuts and administrative problems like Hoffman's experience in Florida.

The solar industry is lobbying the federal government to continue the 30% cash rebate program that's ending this year.

But there's not much hope for an extension, considering the current political climate in Washington, where lawmakers are focused on trimming the budget.

Still, there are signs that Americans will continue to invest in solar energy systems for their homes over the next few years, helping to bring down the costs of solar panels in some areas.

 

 

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Comments
  • The smoke and mirrors the solar industry and GHG folks are trying to use to force people into solar panels is laughable at best. I am all for giving tax incentives to people and businesses if that tax incentive is likely to produce an increase return to the coffers. It seems that people are hard pressed to pay a premium for thier power when they still are allowed to choose what they use to power thier homes. The loss of a 30% federal tax break continues to make large scale solar power production a novelty item for those with more dollars than sense.

    The panels salesmen will also tell people that the panels have a life expectancy of nearing 40 years. This might happen under ideal situations but typical installations experience 15 years average, especially if you consider that possibly in 15 years, more efficient cells are available and people "upgrade".

    The closing line to this article "Still, there are signs that Americans will continue to invest in solar energy systems for their homes over the next few years, helping to bring down the costs of solar panels in some areas." is an example of materials understanding and basic economics. The econimics of the materials used to manufacture solar panels, silicon and precious metals, is opposite of this argument. The manufacturing process requires massive amounts of power, produces massive amounts of air pollution and heavy metal emissions, has devestating enviromental impacts due to the mining operations, and complex manufacturing controls and can not scale up out put based on demand. More crucibles need to be built to handle it and an increase in demand of prcious metals creates in increase in costs, not the drops that are used to justify and increase in demand of solar panels.

    In summary, you have to read between the lines to see what is being said and what isn't.

    shawn  October 12 2011, 10:47 am EDT
    Reply to this comment

  • I always see upfront costs but raely see monthly savings and payback information. Also what is the lifespan of the average installation.

    Ed Kistner  October 11 2011, 6:38 am EDT
    Reply to this comment

  • cut the whining over tea-the good life - big oil companies have been stealing/usurping/siphoning (taxing) the common man's wealth for almost a century. How by controlling regulations on education(salliemae) housing(fanniemae) & agricuture/resources(comewhatmay). truth is they are purveyors of the greed and ruining of the earth. if we are at the tipping point and a cleanup must begin, these companies should be the first in line to help begin financing the transition to needed to cleanup the dirty books, air, water, land and space. measure the offset, bend it, strap it down and pull the strings.

    Greg mcdowell  September 6 2011, 8:25 pm EDT
    Reply to this comment

  • Why should your neighbor pay for your Solar? If the system cannot pay for itself in a reasonable amount of time it is a bad investment. Solar should not be an additional burden upon tax apying American citizens. Robert

    Robert James  September 6 2011, 10:58 am EDT
    Reply to this comment

  • Look, there's more to it then you think, try to get a permit to install solar power in Miami. And it's not just Miami, its all over. The building departments have made it so hard to get a permit and so expensive. I paid $785 in permit fees to install four panels, had to get a structural engineer for wind loading which I recommend, a roofer to mount the brackets to the roof, his $100 permit. They even made me pay a notary to the drawling I provided then in my presents in their 2 month of kicking back the permit. All this after Miami Dade county signing a bill in the legislature to expedite all green power permits. The kicker is I had to show the inspector how to inspect the job after him saying it was his first one. No this is not going to stop me from promoting efficiency and solar power, but I am sure it has had the biggest impact on this market but never talked about. PV

    perry vogler  September 3 2011, 8:57 am EDT
    Reply to this comment

  • There many types of consumers, but I think it boils down to the following. #1. The consumer who will purchase solar because no matter the costs they want to help the enivronment. #2. The consumer who will purchase solar to try and get off the grid and stop paying money to the big utilities. #3. The consumer who will purchase solar because financially it works. #1 needs lots of money, #2 actually benefits the big utilities because they are paying (crediting) you at a discounted rate and selling it back at a much higher rate, #3 Until solar equipment comes down in price or utility costs greatly increase or a combination of both. Basic economics. When this happens we will see solar on every roof, in every yard etc.

    Tom Stollmeyer  September 3 2011, 1:59 am EDT
    Reply to this comment
  • Reply from: Mike Holt   September 3 2011, 7:26 am EDT
    Yep, you are right.
    Reply to Mike Holt


  • I have been involved in the solar industry since the '70s and the pending end of the tax incentives may do to the industry the same as the end of the tax incentives in the early 80s...greatly curtail installation activity. Private industry was not able to maintain without the incentives previously and the question I have is, can they now?

    Rick Messer  September 2 2011, 9:39 am EDT
    Reply to this comment
  • Reply from: Bill   September 2 2011, 10:17 am EDT
    Perhaps not. Many businesses have not and cannot stand on their own merits. That does not mean that taxpayers at large should subsidize those businesses to assure success. A subsidized business is not a successful business. It only appears to be successful due to taxpayer support. All of these special interest business entitities typically grow from lobby appeals under promise of continued financial support to political candidates and causes. Plain and simple, this is not free capital enterprise at work. It is a promise of business to one party in exchange for a promise of employment through election support for the other party. The entitlements are then akin to Socialism and the exchange of favors smacks of fraud. It distorts reality in the short term. The chose few benefit. The masses pay the tab.

    For grins, you might research the Chevy Volt. Consider whether energy is reduced or if the point of usage is just shifted. And you will be surprised to see who the biggest customer of the car is (and the supporter of the program). Think big business. Really big. I don't have time to spell it out for you now. I need to run.
    Reply to Bill

    Reply from: Mike Holt   September 2 2011, 10:38 am EDT
    Let me guess - GE...
    Reply to Mike Holt

    Reply from: Bill   September 2 2011, 9:39 pm EDT
    Right on the money, Mike. And if we look at emission discharges, they happen at the power plant, instead of from each vehicle exhaust. It is even more complex, but in simplistic form, power plants can convert fossile fuel to electric energy at about 85% efficicicency. Multiply that times about .98 to get it out of the plant and times about .97 to get it to the user, then times about 90% to convert it to vehicle motion, and you have about 72% efficiency hitting the road. An automotive engine can beat that substantially. My estimates are quick and dirty, but a bit on the high side. Fact is that everytime energy is converted from one form to another, efficiency suffers. The cumulative product is the end result. This is but one of the reasons why electricity will cost consumers about 5 to 9 times as much as petroleum based fuels. People tend to think of battery power as being free. It is just not so. The recharging costs money. It would take a thousand pages to present the whole story, because we need to look at the capital and expense portions from cradle to grave for all of the processes in harvesting through utilizing the energy. But it is not free and the environmental footprint is complex also.

    My basic premise is that the dollars tend to sort out the success stories. And when government is involved, it is not only a distorted economic situation, but also very inefficient due to the oversight. It always builds bigger government, higher taxes on those who support the government, and higher taxes to support the businesses and conumers who prosper due to the fuzzy math.

    This is way too complex to cover in a thread as simplistic as this one.
    Reply to Bill

    Reply from: Mike Holt   September 3 2011, 7:25 am EDT
    I understand exactly what you are saying, it's called critical thinking and few have the desire to think this way. I think all of this 'energy saving' stuff is a scam...
    Reply to Mike Holt

    Reply from: Bob H   October 12 2011, 6:37 pm EDT
    I may be misunderstanding your point but I believe that the efficiency of gasoline engines in converting fossil fuel to output power is around 30% at best, maybe up to 40% for diesel engines.
    Reply to Bob H


  • It's all right there in this article in black and white.

    For one consumer we all wrote a check out of our own pocket books. Another one missed out on the enforced charity and regreted his decision to spend the money in the first place.

    If the product will not stand on it's own two feet in a free market it should be left to the niche where it makes sense. That being, off remote off grid applications.

    In this case, the solar cells have a finite lifetime and cost a certain amount of energy to produce. What if there is not enough energy produced from the solar cells during the lifetime of the product to make up for the energy expended in producing the solar cells and aluminum framing? In that case, we have all paid someone to waste energy. At best, I suspect solar cells are a wash in this energy equation.

    Solar cells should be deployed only in applications that have no access to the grid until this energy equation changes. The government waste of our money in promoting the misapplication in solar cells is bad policy.

    By canceling the subsidies there will be a natural enforcement in the energy balance by the accurate cost of the solar cells and the cost of energy they will produce over their lifetime.

    Ken Lillemo  September 1 2011, 11:13 am EDT
    Reply to this comment

  • another boondoggle that needs end.

    why is government at any level subsidizing these mostly rich people who can afford to buy this kind of stuff on their own?

    bob  September 1 2011, 10:48 am EDT
    Reply to this comment

  • Let's see if I got this straight. Taxpayers subsidize it and home owner get's to keep the savings.

    Dom99  September 1 2011, 10:39 am EDT
    Reply to this comment

  • I saw the solar fad 30 years ago when whole communities were fitted with solar cells on homes.

    When oil prices dropped, so did the interest in solar.

    Maybe in another 30 years...

    Eric  September 1 2011, 10:19 am EDT
    Reply to this comment

  • Like anything else, If you want something, pay for it yourself, the rest of us do. The handouts must stop, any and all kind.

    Joe  September 1 2011, 6:44 am EDT
    Reply to this comment

  • This is one more example of government picking favorites. An industry lobbies the government to pass bills giving the industry preferential treatment. Such lobbies are based on portrayed concerns such as environmental or safety benefits. Then the industry and the participating consumers benefit at the expense of the taxpayers at large.

    Such subsidies always cause skewed markets and, since the general tax payer base cannot support the chosen benefactors forever, ultimately the chosen favorites will fall to the whims of a free capitalistic market.

    When an industry grows on its own values, and without preferential support, it will tend to last due to genuine support.

    We could argue that these programs would never be allowed to prosper without government interference and support, and we would not receive the benefit. But that is exactly my point. It is a little like supporting your children well into adulthood so that they cannot fail. Then one day, you can no longer provide that support and they must become independent. Independent, but stronger for the change. They would have been stronger still if they had accurately weighed their choices and made well informed decisions, rather thatn making decisions based upon artificial support from some benefactor.

    If an industry wishes to prosper and has a much needed product, it should bring the product competitively to a non-skewed market. Wouldn't we all like to get government funding (money from our neighbors) to start and operate our business, rather than build that business on its own merits -- regardless of how much we think the taxpayers need our business?

    Bill  September 1 2011, 4:57 am EDT
    Reply to this comment
  • Reply from: Mike Holt   September 1 2011, 7:38 am EDT
    Wow, your comment is 100% right on! I'm glad to see that some see the reality of the public policy.
    Reply to Mike Holt


  • no mas habla necessito.

    Greg McDowell  September 1 2011, 3:34 am EDT
    Reply to this comment

  • Yes big oil, big bank and big utility powered politicians have all but closed the door on the many thousands of electricians who would have been needed to install and maintain these consumer owned rooftop systems. Electrical suppliers around the nation will continue to miss out on sales opportunities.

    Keeping tax breaks intact will assure that the same political muscle has future financing.

    Ralph  September 1 2011, 3:11 am EDT
    Reply to this comment
  • Reply from: marty   September 1 2011, 9:49 am EDT
    Big oil, big bank and big utility actually creates jobs. Big solar pushed the government along under the false premise that solar will actually benefit our country. We have known all along that this was not true. There is not a real sustainable market value for solar and the electricians that were employed were actually recipients of a temporary government handout that was doomed to fail. The handout is coming to a close and people will no longer pay for solar without me and you subsidizing their power. We both want electricians employed, but understanding how the market works sucessfully is the way to employ them. Using talking points from MSNBC will not get our country back to work. Eisenhower created the interstate highway system with government money and public policy. It worked brilliantly because it was an industry supported policy that would grow the economy to the envy of the world. Where are the capable thinkers and doers in our country? We need an Ike!
    Reply to marty

    Reply from: Edward Ruiz   September 9 2011, 9:16 am EDT
    Marty,

    You fail to see the issues from a modern view. You must like coal soot in the skies. Keep the subsidies alive! There is a price to be paid for cleaner air and eventually parity of photovoltaic module costs with the utility prices. Germany is over 15% renewable and is now capable of taking its nuclear reactors offline. Come out of you fire burning cave. Renewable energy creates jobs. I placed over 100 people into work last year!
    Reply to Edward Ruiz

    Reply from: Joe   September 9 2011, 1:57 pm EDT
    Long live coal. The Good Lord put it here for us to use. I also have not one problem with individuals or businesses installing a solar or wind system. If you or your customers want one of these systems, then you & your customers should either save up your money, perhaps get a loan AND PAY FOR IT YOURSELVES. I feel i should not have to help pay for these systems. I pay for my own home, heating and cooling systems and so can you. Have a great Day.
    Reply to Joe

    Reply from: Joe   September 9 2011, 2:52 pm EDT
    PS- This isn't Europe
    Reply to Joe



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