Ideal Solar Tax Credits [RE-wrenches]

[sunwise]

Allan -- Check out www.wifocusonenergy.com

I think you will find some of it useful -- Kurt Nelson

-----Original Message-----
From: Allan Sindelar, Positive Energy, Inc.
[mailto:allan at positiveenergysolar.com] 
Sent: Tuesday, December 31, 2002 12:12 AM
To: New wrenches posting
Subject: Ideal Solar Tax Credits [RE-wrenches]

Wrenches,
We in New Mexico have a rare opportunity coming up very soon and I need
your
help. I would like your ideas, please, on an ideal state incentive plan
to
promote solar in general and PV in particular.

We had a change of governorship in the November election, and the new
governor, Bill Richardson (former Clinton Secty of Energy) has pledged
to
promote renewables. His campaign platform included the goal of 10% RE
use by
2010. He's not in office yet (by a day) but the state agencies have
already
began putting together ideas for recommendations to the governor and
legislature. A meeting is planned for January 7, 2003 to discuss
incentitives with the potential to increase solar use in New Mexico. I
will
attend that meeting and offer what I can to support this effort.

What would make up an ideal incentive package: one that is effective,
that
discourages the abuses of the seventies, that keeps us independents in
business, that is sized and capped properly, that is easy to publicize,
and
that provides quantifiable results? I would like to hear your
suggestions,
and if a discussion might arise out of this request, great! I will
prepare a
distillation of the comments received to take to this meeting, and will
make
it available to this list as I have once or twice on other topics.

Thank you,
Allan at Positive Energy

More details, copied here from two documents included with the meeting
invitation:

>From a document entitled POTENTIAL PROVISIONS OF A SOLAR INCOME TAX
CREDIT
12/20/02:
System Type and Size
* Photovoltaics (40 Watts minimum)
* Solar Thermal (10 square feet minimum)
    1. glazed, liquid collectors
    2. unglazed, liquid collectors
    3. glazed, air collectors
* Repair of eligible photovoltaic and solar thermal systems

Credit Amount
~15% of total cost of eligible equipment purchase and installation, with
percentage declining in increments over time.

Maximum Credit Allowance
* Photovoltaics: ~$2,000
* Solar thermal: ~$1,000

Certification
* Equipment and components installed shall be new
* State of New Mexico shall maintain listings of pre-approved equipment
* PV systems shall be installed by New Mexico-licensed electricians or
general contractors
* Solar thermal systems shall be installed by New Mexico-licensed
plumbers/electricians or general contractors
* System installation shall comply with all applicable local, state, and
federal laws, ordinances, codes, and regulations.

Disbursement
* Total credit amount disbursed to approved applicants over a five-year
period.
* Provisions for determining amount each year to be addressed in a
Rulemaking process.

Expiration Schedule
* 15% credit expires December 31, 2008
* 10% credit expires December 31, 2012
* 5% credit expires December 31, 2016


[Numbered] Excerpts from an document titled TAX CREDIT OVERVIEW:
[1] In approaching the issue of a solar tax incentive program for the
State
of New Mexico, there are five issues that should be reviewed:
* The previous program in New Mexico;
* Existing programs in other states;
* Need for the program;
* Potential provisions of legislation;
* Components of an effective program.

[2] Previous Solar Tax Incentive Program
Solar tax credits were available in New Mexico in the early 1980s.  When
coupled with the federal program of that time, there was a combined 65%
credit possible for the total purchase and installation cost of
residential
solar energy systems.  The program in New Mexico was quite active, with
high
consumer interest and generation of new business and manufacturing
activity
in New Mexico.  The primary systems being installed at that time were
solar
thermal types: solar domestic water heating and solar air heating for
heating loads serviced by propane, natural gas, and electric sources.
Photovoltaic (PV) systems were also installed, although the relatively
high
cost and low efficiency of PV technology at that time minimized
cost-effective applications.
There may be several detailed versions of what led to repeal of solar
tax
credits in New Mexico.  The end result in simple terms in 1985 was
decreased
consumer interest and backruptcy of numerous solar companies.  Since
1985 a
significant number of systems installed using tax credits have become
inoperable.  However, many solar companies survived and newer companies
have
established themselves to provide residential solar thermal and PV
systems
in New Mexico.  It appears that, in contrast to the 1980s, PV systems
are
more popular than solar thermal systems.

[3] The Need for Solar Tax Incentives
This issue must be discussed with the existing solar industry in New
Mexico
and other stakeholders.  Establishing a solar tax incentive in New
Mexico
may affect the solar industry by creating increased consumer demand for
residential systems, the creation of new solar companies, the creation
of
new manufacturing plants for solar system components, and new
requirements
for equipment and installations. It should be noted that a campaign
pledge
by Governor-Elect Richardson is to push for a state income tax credit of
15%
on the installation of residential solar and wind systems.

[4] The federal government has authored a case study report on state
renewable energy incentives through the National Renewable Energy
Laboratory.  Examples of lessons learned through financial incentive
programs in other states are:
* Program participants are motivated by factors other than financial
incentives;
* A weak installer and inspector infrastructure can discourage
consumers;
* Electric utility support is crucial to ensuring a smooth
interconnection
process for PV systems;
* A comprehensive renewable energy education program may be needed to
generate new interest in renewables;
* A set of complementary incentives (e.g., net-metering, education, tax
incentive) is recommended in order to have a significant market impact;
* Administering a tax incentive program through the state energy office
may
make it more effective;
* A mechanism to ensure installation quality is recommended;
* Caps on eligible costs may reduce incentive effectiveness.

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