Monday, August 17, 2015

US Energy Policy and Home Ownership

An “Open Letter” to our Texas elected representatives 
to the US Senate and House of Representatives


As a homeowner in Texas, I feel that home ownership and long term investments in our homes, helps to facilitate a strong foundation for families in Texas and the United States.

My family recently made a long term investment in our home by purchasing a solar photovoltaic (PV) electric system to capture the local clean energy falling on our home every day. The US Internal Revenue Code Section 25D residential solar investment tax credit (ITC) is achieving its goal to encourage individuals to increase investments in residential renewable energy systems. It helped our family, and many like ours, to make the personal long term commitment to invest in energy freedom. It is a great feeling to be more energy independent!

Using rooftop (or onsite) solar PV technology now available has the great advantage of generating the electricity where it is consumed. This helps all electricity consumers by reducing the strain on the overall electric grid and reducing energy losses that occur when transmitting electricity over long distances. And especially in Texas, solar PV generates the electricity when we are using it the most – when the sun is shining! (It was especially satisfying to know that when the Texas electric grid was hitting peak demand last week my solar PV system was helping to offset some of this peak electricity demand.) As Texas continues to grow, building more of our new homes with solar PV systems to make them net zero (i.e. they produce as much energy as they consume on an annual basis) will further reduce the strain on our electrical grid and help more citizens to become more energy independent!

The Section 25D residential solar ITC also accelerates growth of small businesses across Texas and the rest of the country - businesses that install, contract, or work on residential systems. A recent policy brief titled “Clean Energy Employment Booming, Creates a More Diverse Workforce and Higher Quality Jobs” indicates that Texas had over a 60% growth in solar jobs in 2014. While the rooftop solar market has grown dramatically in part due to third party ownership and leasing, the residential market is beginning to further expand with loans and direct ownership models making the section 25D residential solar ITC extremely important for years to come. For additional information on solar jobs in Texas, see the 2014 Texas Solar Job Census Report.

If the Section 25D solar ITC does expire at the end of 2016, it will stack the deck against homeowners who wish to make this long term investment in their home.  This is because the similar Section 48A solar ITC for commercial owners, while currently set to step down in percentage at the end of 2016, will not go to zero like the residential solar ITC. Thus commercial owners, including third party owners leasing rooftop solar PV systems to homeowners, will continue to receive a solar ITC. Additionally, commercial owners will continue to receive a business depreciation incentive which is not available to residential homeowners.

While considering the tradeoffs for renewable energy incentives/subsidies, I did some research on the long term history of energy incentives/subsidies in the US.  What I found is that all energy sources have benefitted from long term and continuing government incentives. (For example, see reference The Historical Role of Federal Subsidies in Shaping America’s Energy Future .) So while I generally believe that most energy incentives should be phased out over time, I feel most strongly that we should start first by eliminating all incentives and industry specific tax benefits for those energy sources that have been receiving them the longest (in some cases for 90+ years). Once these are ended, then we could consider a gradual phase out of incentives for the newer renewable energy sources. However, if we do identify societal reasons to continue to provide favorable tax incentives for energy sources, then we cannot in good conscience end incentives for new technologies, especially clean renewable technologies that generate electricity directly where it is consumed, while continuing to provide favorable incentives and tax treatment for incumbent energy sources.

As my elected representatives to our US legislature, I am asking you to take the necessary steps to review and extend this solar ITC, in a sensible way, for a sensible time, with an appropriate phase out period. This would be a sound tax policy that provides the certainty necessary for Texas and American companies to plan for the future and to innovate; and enable more homeowners to experience greater energy independence. While historically, Texas’ great energy resources have been oil and gas, new technology innovation is allowing us to add wind and solar energy (including local on-site solar) into the mix.

I appreciate your collective experience and leadership in service to the citizens of Texas, and I look forward to having your support on this important home ownership and energy independence issue. I would welcome the opportunity to speak more about this important topic with you.

Best Regards and Shine On!
Richard Howe
Plano, Texas

This letter is from one of our Plano Solar Advocate (PSA) volunteers and does not specifically represent the views of other or all PSA volunteers. Comments and feedback are encouraged in the comment section below.

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