This month, Louisiana has set the wheels in motion for phasing out tax credits on solar energy. The state House on Tuesday easily approved a bill, named House Bill 705, to end the incentives by 2020, but how will this affect the US state’s environmental wellness?
Bill sponsor Erich Ponti, R-Baton Rouge, told the House, ‘As the production cost of solar is going down, then [solar energy systems are] becoming more affordable and therefore the credits aren’t as needed as they once were.’ House Bill 705 would not only reduce income tax credits for the purchase and installation costs of solar electric and thermal systems, but it would eliminate the tax credit for wind generators. This latter move is because the relatively flat terrain of Louisiana means that wind generators have not gained much traction.
As it stands, residents of Louisiana are able to claim up to 50% of the first $25,000 in costs for the purchase and installation of solar energy systems. However, the new bill aims to split this category in two; solar thermal (which provides heating), and solar electric (which provides power). Credits for the former would be immediately phased down from the current level to 50% of the first $10,000 in costs; and then down to 35% after 2017. Solar electric credits, on the other hand, would stay as is for now, but then be phased down to 35% of $25,000 in costs after 2017. At the end of 2020, all credits would be eliminated.
The bill was approved without opposition in committee, and it now heads to the Senate for further debate. If the bill is passed, current law would also be tweaked to allow only one solar system per home. Lawmakers raised questions about abuse of the credits, to which Ponti responded, ‘Multi-system installation is very prevalent.’ According to figures from October, solar energy tax incentives have far exceeded original cost projections. Five years ago, the incentives were not expected to cost state taxpayers more than $500,000 a year in lost tax revenue, but this number actually reached nearly $39 million by 2011. The state paid $24 million for the credits in 2012, Ponti noted.
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