BATON ROUGE, La. -- The state Senate passed a heavily amended and controversial House bill Monday that would phase out the lucrative solar energy tax credit by 2017.
The tax credit is among the most generous in the country. Louisiana gives homeowners or leasing companies a credit of 50 percent on up to $25,000 when they install solar panels. Combined with a federal tax credit of 30 percent, the subsidy had gotten out of control, senators said.
“When they tell you I'm in business, they're in business with an 80 percent subsidy from the rest of the taxpayers in this country,” said Sen. Robert Adley, R-Bossier City, who authored several amendments. “I submit to you that everyone in this room would be successful if they got the government to pay 80 percent of whatever you do.”
The issue heated up in recent days as factions in the industry battled over various amendments. The controversy pitted installers and manufacturers of the panels on one side and leasing companies on the other.
As we reported Friday, the 50 percent tax credits the state has been handing out since 2009 were too expensive during the current budget crunch. So, Rep. Erich Ponti of Baton Rouge moved to end the credits by 2020.
Several amendments later, that was cut back to 2017 and the leasers were severely limited in what they could charge for their systems.
Those who install the systems said leasers had hijacked the industry by claiming 75 percent of the tax credits for themselves. And they alleged that some leasing companies were abusing the system by overstating the savings they could offer or by operating without a contractor’s license.
But the leasing companies said they were providing an important service to make sure the credits helped lower-income families who wouldn’t be able to pay the up-front costs of buying their own systems: the very people the credits were intended to help in the first place.
Tucker Crawford, chairman of the region’s largest industry group, the Gulf States Renewable Energy Association, said Adley’s amendments struck a better balance and allowed the industry to clear a big hurdle. He said that while other industries tried to protect their budget-sapping tax credits, the solar power industry volunteered to dial theirs back.
“There are several different financing mechanisms out there, and as long as it’s following the law, there should be as many options as possible,” Crawford said. “I know of no other industry that offered to voluntarily sunset their credits. We need to get credit for that whether you agree with leasing or sales.”
A key aspect of Adley’s amendments is that they end the practice of collecting credits on each portion of a solar energy system. Some companies were able to claim 50 percent credits on each panel and component and end up with far more than $12,500 in credits (50 percent of $25,000) on a single house. Under the amended bill, there will be only one credit per household.
The bill also now requires companies to install equipment made in the United States or in countries with free-trade agreements with the U.S. That became a big issue after a New York Times report last week about Chinese-made solar panels spontaneously catching fire in California. Some local companies use products from Chinese manufacturers, but under an amendment by Sen. Danny Martiny, R-Metairie, they would no longer be able to install that equipment as of January 1, 2014.
The bill now goes back to the House to be consolidated with the version they already adopted.