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Solar energy gets huge earmark in bailout bill

Congress' financial bailout included an increase and extension on tax credits for solar energy users, still mostly an option for the rich.

BY JOHN DORSCHNER
jdorschner@MiamiHerald.com

Earlier this year, Vicki Eckels put a state-of-the-art solar power system on her house in Fort Lauderdale for $43,000. ''I feel good because I'm a clean energy producer.'' The federal government will reward her by knocking off $2,000 from her 2008 taxes.

If she had waited until next year to install the system, her tax savings could have been $12,900, thanks to a provision hidden within the massive bailout Congress passed last week.

Along with dozens of other items added to the $700 billion package were tax breaks for makers of wooden arrows for children, rum sold in the Virgin Islands -- and renewable energy.

The tax credits for wind and solar were set to expire at the end of this year. The bailout package not only extended them, it enhanced the solar credit. Instead of a 30 percent credit with a cap of $2,000, the credit starting next year will cover 30 percent of however much a homeowner spends.

Altogether, the bill contains $17 billion in energy-related credits, according to an analysis by the Joint Committee on Taxation.

Solar company execs in Florida were cautious about how much the credits might boost business, saying the economic downturn and the expense of solar were still inhibiting many buyers, who often spend $30,000 to $40,000 for a serious solar installation.

But nationally, there was a lot of support for the energy bailout. ''This is huge,'' said Julia Hamm, executive director of the Solar Electric Power Association. ''Especially the extension,'' which keeps the credit going through 2016. Ordinarily solar and wind credits have had a short life of a year or two, and that's still the case with wind, which Congress extended only through 2009.

Rob Kornahrens, president of Advanced Roofing in Fort Lauderdale, said the federal effort was worthwhile, but a similar state rebate has run out of money, and he's concerned that the economic downturn will hurt sales.

''It's a very tough economy to be selling solar,'' Kornahrens said. ``It's a luxury.''

Advanced Roofing, a commercial roofer for more than two decades with more than 400 employees, has been pushing an advanced solar technology -- thin film, flexible photovoltaic cells that can be laid down practically anywhere. Advanced has installed solar film on top of three Publix supermarkets and is working with Florida Atlantic University to put an installation on its building in downtown Fort Lauderdale.

Kornahrens said a sister company, Advanced Green Technologies, has a contract with Uni-Solar, a Michigan manufacturer, to purchase $4 million worth of thin-film PV a month because he sensed there would be a worldwide shortage of solar cells. He was right: A Spanish auto-making plant ended up buying $21 million of PV film from his inventory.

Kornahrens said he and other solar companies are concerned about the state rebate program, which had $5 million this year to give back to residents who invested in solar energy. The money ran out almost the day it became available. Eckels, who has an Advanced Roofing installation, said she might qualify for $20,000 in rebates if more money gets put in the fund.

Roy Ratner of Atlas Solar Innovations, a Pompano Beach firm that also does solar PV installations, said that while the new federal credit might help some, solar will remain mostly a choice of the rich unless the state gives major help.

Ratner said he'd like to see the Public Service Commission get involved and start providing solar customers with huge price breaks if they sell power back to the utilities. Rather than the 10 to 12 cents per kilowatt-hour that utilities now pay for power, Ratner would like solar homes and businesses to get 53 cents per kWh, which is about what Germany forces utilities to pay private individuals who produce solar power for the grid.

''We need the state to step up with better policies,'' Ratner said.

Gregory Wetstone of the American Wind Energy Association said wind producers did not fare as well in the bailout because it is a more expensive hit to the national budget. The wind credit is 2.1 cents per kWh.

''Wind is much bigger than solar,'' said Wetstone, because vast wind farms extend throughout much of the Plains States and many areas of the West, while solar is just getting started.

A one-year credit extension will mean $5 billion lost in federal revenue, said Wetstone, while the solar credit extended for eight years will be about $1 billion.

In the bailout package, many other energy elements also got tax breaks, including biodiesel, research for clean coal and bonds to build biomass and geothermal plants, as well as rebates for buyers of plug-in electric cars and trucks.