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Why Solyndra Just Doesn't Matter

09/27/11

  04:18:00 pm, by Jim Jenal - Founder & CEO   , 708 words  
Categories: All About Solar Power, Solar Economics, Solar Tax Incentives

Why Solyndra Just Doesn't Matter - Updated

1BoG infographic

UPDATE: The folks over at 1 Block Off the Grid have a great infographic that does a fine job of putting the Solyndra situation into perspective.  You should go check it out and then come on back here to see what we have to say.  Go ahead - check it out - we’ll wait!

Unless you have been hiding in a cave lately, you have undoubtedly encountered the media orgy over the collapse of solar panel manufacturer Solyndra.  Yet amidst much media hype - most of it driven for political gain - the fact remains that as to the overall solar industry, Solyndra just doesn’t matter.

Federal Subsidies for Solar

Much has been written about the so-called failure of federal solar subsidies in light of Solyndra’s $535 million dollar loan guarantee debacle. Indeed, some would go so far as to demand that all solar subsidies should be abolished.  To be sure, there are many, more reasoned voices explaining the error of such thinking, including at the NY Times, Time magazine, and the Washington Post, but the fact of the matter is that for most solar installations, loan guarantees play no role whatsoever.

Here is where federal money does assist solar power installations:

  • The 30% Federal Investment Tax Credit - this program allows for residential and commercial clients alike to take a tax credit worth 30% of the system cost against their taxes.  On a typical residential installation, that credit is worth anywhere from $4,000 to $12,000.

  • The 30% Federal Grant for Commercial Projects - commercial clients can (through the end of this year) elect to receive a grant in lieu of the tax credit making the 30% available immediately without regard for the client’s tax appetite.

  • Accelerated Depreciation - the final benefit is the ability of commercial clients to depreciate the value of the equipment on an accelerated schedule (100% in Year 1 for projects installed this year and five year depreciation for all other projects).

Collectively, these federal tax subsidies save residential clients thousands of dollars, and as much as 50% of the total system cost for commercial clients.  As a result, these subsidies play a part in every solar project installed in this country and they have gone a long way toward making solar more affordable, particularly during difficult economic times.  The money is distributed to all who qualify for it without favorites - mostly - and in terms of actual dollars, it represents a tiny fraction of the $$$ lavished on other players in the energy marketplace.

Taking the Fifth

Against that backdrop of how most solar projects operate in this country, the top executives at Solyndra just pleaded the Fifth Amendment in refusing to answer questions posed by a decidedly hostile House committee.  That is their right - enshrined in the Constitution, no less - and it does not mean that they are guilty of any wrongdoing.  (Indeed, the lawyer in me notes that it would constitute malpractice to let your client testify before such a committee while multiple investigations are in the works.)

But the optics are awful.

Add this sad display on top of solar’s pre-existing PR problems and it is clear that, once again, the solar industry is in for some harsh words and tough times.

What the Rest of Us are Doing

So what can the rest of us - who aren’t taking the Fifth but are actively promoting solar for our clients because we know that it is a great deal for them - do about this?  Plenty.  Here are some suggestions:

  • We can push-back against the madness with letters to the Editor or posted rebuttals to the arguments made by the fossil fuel industry (SEIA has some great talking points to help).  After all, not only is the future of solar at stake, but our children’s future as well.

  • We can encourage our clients - the folks who know best just what a great deal solar really is - to speak out and relate their experiences.

Solar is an exciting and dynamic industry and as such it has had and will continue to have winners and losers.  But Solyndra aside, the future for solar is bright, and for those of us at Run on Sun, there’s nowhere else we would rather be - join us!

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
In addition, Run on Sun offers solar consulting services, working with consumers, utilities and municipalities to help them make solar power affordable and reliable.

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