Sunday, August 2, 2009
No word yet from DOE, but I asked Adam Browning at the Vote Solar Initiative why he thought DOE didn’t offer this same deal for homeowners. He pointed out the decision was made by Congress and said he’s heard a couple of reasons why the program targets businesses. First, congress was concerned about fraud and gaming the system and figured it was easier to keep tabs on 5,000 businesses than on millions of individuals.
Perhaps a more important reason is that this way the program gets more figurative bang for the literal buck. Most individuals have a tax burden at the end of the year, so giving out tax credits for renewable energy investments lowers their taxes while at the same time accelerating the move to a clean, renewable energy economy.
Many businesses already take advantage of existing tax credits. They don’t need one more and wouldn’t use it — or so the theory goes. The best way, then, to motivate them to invest in renewable energy is to give them cash incentives.
That all makes sense to me. But…the popularity of solar leasing programs (rather than buying) suggests (to me) that in the real world, at least a couple of things could be going on. 1) Too many people can’t get loans to buy solar panels outright; and 2) Even if they can get a loan, the promise of a tax credit next year is not the same as cash in advance.
With financial markets still too slow to make loans, the Obama administration announced today it would begin distributing $3 billion dollars in direct payments to companies with renewable energy projects already planned.
The payments, which will go to an estimated 5,000 renewable energy production projects, are in lieu of tax credits previously offered.
“As we move quickly to get our economy back on track and to repair the financial system, we must make investments that lay the foundation for a stronger economic future,” said Treasury Secretary Timothy Geithner. “Too many renewable energy projects have stalled due to a lack of financing. The Recovery Act program will lead to investment in our long-term energy needs, move us towards energy independence, increase jobs at energy-specific businesses, and protect our environment.”
Energy Secretary Steven Chu also commented on the cash incentives program, which will be run jointly by the Treasury Department and the DOE.
“This program will play a major role in encouraging private sector capital to invest in clean energy development, creating new jobs that can’t be outsourced,” said Chu. “It is an investment that will continue to help our economy grow and ensure advancement in clean and renewable energy development.”
Companies can apply for the program online, here.
Could have been even better
While this is good news, it could have been even better if the DOE and Treasury had announced that the same changes — cash funding up front instead of a tax credit in the future — applied to homeowners wanting to install solar panels. We have a call in to the DOE press office asking why homeowners didn’t get the same deal. We’ll let you know the answer as soon as they reply.