Wednesday, April 13, 2011

Texas Sized Solar Rebate

The Texas Legislature will consider a five year, $400 million subsidy for solar energy producers. The money comes from electricity users via a "fee."  Standard Times reported:

The bill originally imposed a $50 a month charge on industrial electric meters, a $1 a month charge on residential meters and a $5 a month charge on commercial meters with a provision allowing residents and small businesses to opt out of the program entirely.  The originally proposed fee amounts will likely be cut in half.

The state will use the money  to "rebate" solar producers.  Closer examination shows no return of funds paid to the state of Texas, but rather a direct subsidy.  SolarServer cited: the amounts proposed:

Rebate levels will be $2/watt for PV systems 10 kW and smaller, $1.40/watt for PV systems between 10 kW and 2 MW, and $1/watt for larger systems.
A 1 megawatt system would receive a $1.4 million subsidy from the Texas electricity users.  A 10 kilowatt system would get $20,000.  A 5 megawatt system would garner $5 million.

Consider Texas's current incentives for solar energy, as outlined in a 2010 House Research Organization report,"Solar Energy in Texas."

In calculating its business franchise tax, a corporation or other entity subject to the state franchise tax may deduct from the tax base the cost of a solar energy device. An entity may deduct 10 percent of the amortized cost of the system.

Texas also offers a franchise tax exemption to companies in Texas engaged solely in the business of manufacturing, selling, or installing solar energy devices. This exemption has no ceiling, so it is a substantial incentive for solar manufacturers.

Texas voters in 1978 adopted a constitutional amendment authorizing the Legislature to exempt solar or wind-powered energy devices from property taxes. The Tax Code allows an exemption from the appraised value of the property equal to the amount that arises from the installation or construction of a solar energy device primarily for on-site use.

Non-tax incentives in Texas include a program offered by the Texas Department of Rural Affairs, to provide grants to qualifying cities with fewer than 50,000 residents and counties with fewer than 200,000 residents for installing renewable energy projects. Also, the LoanSTAR Program, a revolving loan program through SECO under the Comptroller’s Office, offers low-interest loans to all public entities, including state, public school, college, university, and non-profit hospital facilities, for enacting measures to reduce energy costs.
This is on top of federal subsidies:

The federal government offers tax credits to manufacture and install solar equipment. In 2005, the investment tax credit for solar projects increased from 10 percent to 30 percent. The credit reduces overall tax liability for individuals or businesses that invest in solar energy generation technology. In 2008, Congress extended the credit to 2016 and to residential and utility system owners.

When the recent recession tightened credit markets, the federal government, as part of the American Recovery and Reinvestment Act of 2009, offered a 30 percent upfront grant instead of the solar tax credit, allowing the commercial tax credit to be taken as a cash grant for a limited time.

The Recovery Act eliminated federal taxes on subsidized energy financing provided under federal, state, or local programs for projects designed to conserve or produce energy. It also provided a new tax credit for renewable energy manufacturing facilities and billions of dollars more for solar research and deployment financing.
Between the feds and the state of Texas, that's major help for sun soaking corporations.. How might this bubble pop in five to ten years?

The rationale for adding the Texas "direct incentive" is job creation.

"We want to make sure that nobody thinks it will be fiscally difficult on them, but we want to make sure we can give it the nudge that's needed," Trent Thomas (staff for Rep. Drew Darby) said. "Our goal is, we want to see these companies come to Texas. But these are people who, if we don't create the program, they will go somewhere else and these other states will reap the benefits of the sales tax, the sales dollars and job growth."
Texas already has Gov. Perry's Texas Enterprise Fund and Texas Emerging Technologies Fund to incentivize companies to locate here.  What's the number of projected jobs under the Lone Star Solar Subsidy?  Time will tell regarding the bill's passing and if Texas is able to outperform New Jersey.

It's clear the Texas Legislature can find funding for its priorities.  Sunlight is the best disinfectant.  That may be citizens' new health care option, at least in the Concho Valley..

Update 4-17-11:  GoSanAngelo ran another story on Darby's solar initiative.

Update 4-21-11:  Drew Darby's op-ed ran in the Standard Times as did a letter of support from Applied Materials. The 1,000 megawatt goal would generate $1 billion to $1.5 billion in "rebates."

Update 4-23-11 GoSanAngelo ran an editorial in favor of the incentive plan.  At least they didn't call it a rebate.

Update 4-26-11:  The solar boys are riding into town   Their last stop was New Jersey.  HB 2961 can be read online.  

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