Dear Members of Congress, As some of the nation’s leading solar energy companies, we write to convey the importance of extending the Section 48 and Section 25D investment tax credits (ITC) for solar and other clean energy resources.
After telling members of Congress that they were happy with the phase out of the ITC, now they suddenly ask for another handout.
The ITC has a tremendous track record of spurring clean energy deployment across the country, creating nearly a quarter million well-paying jobs and driving down electricity costs for consumers, businesses and municipalities. It also has generated significant economic activity, accounting for $140 billion in private investment since its inception.
The ITC is only one of the many subsidies for solar energy. Utility-scale solar is approximately 80% subsidized. There is the ITC currently 30% and scheduled to decline to 10% by 2022. There is tax equity financing created by special depreciation rules that results in further looting of the federal treasury by reducing income tax from solar development partners. There are state renewable portfolio laws that enforce a quota for solar and other renewable energy and result in long term power purchase agreements that enable extraordinary financing and a guaranteed market. Solar is not remotely competitive without all these tricks for picking the public’s pocket.
As you consider clean energy tax legislation, we urge you to include a multiple-year extension of the Section 48 and Section 25D tax credits before they begin to phase down at the end of this year. The residential and commercial investment tax credits will step down from 30 percent at the end of this year. The credit falls to 26 percent in 2020, 22 percent in 2021, and, in 2022, the residential renewable energy credit is eliminated, and the commercial investment tax credit drops to 10 percent.
It’s time to bring this fiasco to a close and repeal all the special tax deals for solar, both the ITC and the support for tax equity financing. Residential, rooftop solar is especially wasteful because these small scale installations cost three times as much per kilowatt hour compared to utility scale solar. Utility scale solar is a complete waste of money. It is not cost-effective for reducing CO2 emissions and is supported 80% by taxpayers and electricity customers.
As a result of these credits and greater competition in the electricity sector, more Americans have access to clean energy than ever before. The greatest solar job growth today is happening in the Midwest and Southeast, in emerging markets such as Kansas, North Dakota, Illinois, Alabama and Florida. More than 240,000 Americans work in solar energy today, a figure that has more than doubled since 2010. According to the Bureau of Labor Statistics, “solar installer” could become the fastest-growing occupation in America.
Subsidized jobs don’t help the economy.
While this recent success has driven 50 percent annual solar growth over the past decade, solar energy can do more for the economy, especially since it accounted for only 2.3 percent of total U.S. electricity generation in 2018 and less than 1 percent of generation in 29 states. Harmful public policy changes could quickly compromise future growth. For instance, the solar industry has experienced $8 billion of cancelled or deferred investments and the loss of 9,000 jobs in the wake of federal policy changes singling out solar. That's why we're asking you to extend the Section 48 and Section 25D investment tax credits for clean energy resources and support the continued growth of solar nationwide. Thank you for your continued work and leadership developing American-made clean energy. We appreciate your consideration of our views and look forward to bringing solar to more of your constituents.
---The letter continues with list of companies requesting the subsidy extension---
Here is a short summary of the problem with solar energy.
The Problem With Solar Energy July 17, 2019
Non-electrical solar is great for heating swimming pools and solar panels are a solution when electricity is needed off grid. But solar is a complete waste of money when large installations are constructed to supply grid electricity.
Solar is erratic electricity. You get it only during the day and only when clouds don’t obscure the sun. As a consequence solar can’t replace existing coal or natural gas plants. They are still needed to supply electricity when erratic solar happens not to be working. Whenever you read that solar is replacing coal or natural gas, that is always a lie.
The only economic benefit of solar is to reduce fuel consumption in the natural gas and coal plants when solar happens to be generating electricity. In other words, solar is a supplement, not a primary energy provider. When a megawatt hour of solar electricity is substituted for a megawatt hour of natural gas electricity approximately $20 worth of fuel is saved in the natural gas or coal plant. That is the true value of solar electricity – $20 per megawatt hour. If solar were not heavily subsidized it would cost about $100 per megawatt hour, five times more than it is worth. The subsidy is 80%.
The subsidies go far beyond the 30% federal Investment Tax Credit (ITC). Special depreciation rules enable a scheme called tax equity financing. This complicated scheme essentially loots the federal treasury by reducing income tax payments from highly taxed corporations seeking a tax shelter by partnering with solar developers. State renewable portfolio laws enforce quotas for so-called renewable energy. These quotas force utilities to offer lucrative power purchase agreements to solar developers. The developers get a guaranteed market and access to excellent credit terms. This is probably the most important subsidy.
Solar is not a cost-effective method of reducing CO2 emissions. This is measured by the cost of a carbon offset. A carbon offset is the reduction of CO2 emissions by one metric ton. Carbon offsets are traded and can be purchased for as little as $4 each. Generating a carbon offset by using solar to reduce emissions from a natural gas plant generates carbon offsets at a cost of about $140 each. The most serious people in the climate change arena, such as Dr. James Hansen or Michael Shellenberger, make it clear that nuclear is the only viable solution for large world-wide reductions in CO2 emissions. Solar does too little and costs too much.
It is fashionable to suggest that adding electricity storage in the form of batteries can help solve some of solar’s problems. The batteries are extremely expensive and wear out in five years. Batteries are just another fake solution. The industry wants special subsidies for batteries too.