Re-hashing the 2010 Solar Incentive Report Card: Blue States and Red States

Published on September 1, 2010 by Dan Hahn.
Categories: New Jersey, Solar Legistlation.

The chart above is the same solar incentive report card we produced in part 4 of our 2010 report, albeit with one difference: blue and red states. My main impulse was not to rustle a regional divide between people in our country, yet instead to highlight differences in legislative policy and priorities.

I was curious to understand why so many red states lag so far behind in our report and started doing some more research this morning. I figured it can’t be just because of strong oil, gas, and coal lobbies. Could it? Well, who am I kidding, of course it could.

However, I found a ranking of federal dollars spent per dollar of taxes received in each state, and that raised my eyebrows. Here’s a great graphic made by a Harvard blogger which illustrates where our federal dollars flow. I didn’t realize Harvard had blogger guys but I was thankful for this one. I marked his chart up to more clearly show the red and blue states:

All those little red dots in the upper right are red states, the little blue ones to the lower left are blue states. The higher you go up the y-axis, the more conservative the state in the 2008 election. The further across the x-axis you go, the more money you get from the government than you pay in taxes.

If you affiliate yourself with Republican conservatives, you might be surprised to see a strong statistical relationship, but that the direction is the opposite from what you would expect: The red states (those that vote Republican) generally receive more subsidies from the federal government than they pay in taxes; in other words they are further to the right in the graph. It’s the other way around with the blue states (those that vote Democratic).

The big blue outlier way to the right in the graph is New Mexico, though there are several expensive air force bases and some top secret stuff located in the state. I was interested to see the cash cows for the rest of the country are taxpayers in New Jersey, Nevada, Connecticut, Illinois, Delaware, California, New York, and Colorado. Intriguingly, those same states score very well in our solar incentive report above.

This trend in wealth redistribution in the form of subsidies is not a new one. Here’s the trend from 1981-2005 which I just compiled from the Tax Foundation’s data:

The closer you get to being ranked #50, the less the amount of federal taxes coming from your state actually gets spent in your state. Note how Red and Blue states diverge after Reagan took office in 1981 and still haven’t rebalanced? Now there’s a true conservative who got things done!

Who is ranked #50? Well, here’s New Jersey, the state with arguably the best solar incentives in the country:

Not only do the tax dollars in New Jersey flow mainly to Republican states which fare very poorly in our report solar report card, but New Jersey also manages to have the best solar incentives in the country. While those incentives start with a strong renewable portfolio standard instead of tax dollars, it is intriguing to note how money flows through the country, who is tooting what horn, and where progressive solar legislation gets enacted and where it is glossed over.

I think it’s funny that more and more blowhards are tooting the “cut government spending” horn and pointing fingers at states that have relatively strong solar policies as prime targets of ill-advised socialist expenditures and “earmarks”. After all, the more these people toot, the more they are amplified by the mainstream media. That’s mainly because a few billionaires are motivated to force feed political opinion into your eyes and ears, but we’ll save that story for another day.

Maybe the red state political establishment has become accustomed to battling for their disproportional share of handouts from the Fed. While they could be drafting new clean energy policy to spur growth in a new industry and create more jobs, there appears to be more interest in fighting for solid positioning in the dirty oil, coal and gas pork trough.

What to conclude from all of this? Well, for one I should not have been surprised to learn Glenn Beck was urging his followers to boycott the census a few months back. Maybe he didn’t want them to find out their state coffers continue to be lined with Democrat dollars. On the other hand, even without free subsidies from other states, our country’s big blue cash cows are spearheading the nascent solar industry movement. Good on them!

No matter where you live or who your representatives are, we urge you to at least get a quote for solar energy on your home. You may be very surprised how quickly you can be in the green.

Charles takes offense to solar power in New Jersey

Published on August 31, 2010 by Dan Hahn.
Categories: New Jersey.

I had a spurt of creative energy this afternoon and decided to make a movie about how much sense solar power makes, particularly in New Jersey. In this little episode, smug Charles cannot contain his disdain for residential solar energy. Our smart thinker suggests he look into things further. I hope you like it!

SPR Report Card 2010 – Part 10 – Solar Sales Tax Exemptions

Published on August 28, 2010 by Dan Hahn.
Categories: Reports.

When states give you a sales tax break on solar, we notice. You should too.

The chart above provides a simple reference for you to see if your solar investment is exempt from sales taxes. You’ll know you’re dealing with a shady installer if they include taxes on your system when there is no need! Then again, why would you be dealing with a shady installer in the first place when you could get a great group discount on solar from a trusted installer?

Taxes on large purchases aren’t something to shrug off! With purchases of solar systems in the 5 digits, you can expect a hefty surcharge, unless state legislatures reward you for your contribution to a growing green economy.

State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).

SPR Report Card 2010 – Part 9 – State Loans for Solar

Published on August 27, 2010 by Dan Hahn.
Categories: Reports.

Loans for solar!

Yes, these are the details on state loan programs available for those of you who do not have piles of disposable income lying around. While private financing is readily available in juicy solar states, many times the state loan options available cannot be beat. If you find yourself short on cash, but have good credit and own your home, a solid state loan program for solar energy can unlock the door to your solar investment.

I don’t understand your acronyms or the terms of the loans. Where can I find the links I need to apply for some of these loans?!

The specific details of each state’s loan program are located on your state’s solar page. Click your state on the right sidebar of this page for more info. Or, if you’d prefer request some more information from our solar experts. They’ll help you out in a jiffy.

What does “PACE” mean?

PACE stands for “Property Assessed Clean Energy”. Basically, the state allows your city to finance your solar energy installation with an assessment on your property taxes. Watch this video Dave narrated to learn why it is awesome and very important:

So PACE seems great, why are some states that passed legislation for PACE to work still getting failing grades?

While many state legislatures have indeed paved the way for cities in their state to finance energy improvements through property tax assessments, very few cities are equipped with the tools, support, or know-how to do anything about it. For specific cities, PACE is slowly getting off the ground. We’ve noted those areas above by stating, “PACE programs”.

The big elephants in the room are Fannie Mae and Freddie Mac, who scoff at the idea of a solar installers or any other contractors being paid off immediately through property taxes instead of them. That complicates things!

SPR Report Card 2010 – Part 8 – Property Tax Exemptions

Published on by Dan Hahn.
Categories: Reports.

About this section of the report

While rated at just 3% of the overall report card summary grade, property tax exemption status is a very important consideration when putting together your solar investment information. The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.

Why should I care about property tax exemptions for solar?

When you add solar panels to your roof, you’re adding value to your home. Not only are solar panels beautiful, they produce a clean, economical, and reliable source of electricity for your family. Some states ding you with added property tax for your forward thinking, while others reward your common sense with a tax exemption.

How much value will solar add to my home?

Solar will immediately add approximately twenty times your annual electricity bill savings immediately to the value of your home upon installation. For many 5kW systems, that amounts to about $20,000. Don’t believe it? Check out this video!

Whoa, that’s a lot of property value increase!

Indeed it is. However, an additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state come tax time. If you’re lucky enough to live in a state with a complete exemption from added taxes, you can breathe a sigh of satisfaction that your state legislators are doing something right!

SPR Report Card 2010 – Part 7 – State Tax Credit Overview

Published on by Dan Hahn.
Categories: Reports.

About the chart above:

While state tax credits do not account for a huge chunk of the overall solar incentive pie (4% of the overall report card), they can be an important factor consider, especially if you have some personal tax liability. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.

For example, pretend you’re in Idaho. Yeah, some people give Idaho a bad wrap, though if you were to have $20,000 in personal tax liability and live there, you could install a fine 3kW solar system for about $20,000 and write off the whole shebang on your taxes – installation, permitting, metering, everything! Free electricity! That’s pretty sweet.

Also, one of our readers pointed out that in Louisiana, you may install multiple systems and qualify for their $12,500 tax credit multiple times. Nice tidbit to know!

The details on all the state tax credits above were sourced in August of 2010, from the Database of State Incentives for Renewables and Efficiency.

SPR Report Card 2010 – Part 6 – State Rebate Details

Published on by Dan Hahn.
Categories: Reports.

About the chart above:

Here’s the state by state listing of solar rebates for 2010. In the left column, we list the expected amount of rebate for a 5kW residential solar energy system installed by state. Rebate program details were sourced from the Database of State Incentives for Renewables and Efficiency in August of 2010. Rebate grades are worth 5% of the overall summary report card (see the pie chart in the Part 2 summary grades).

SPR Report Card 2010 – Part 5 – Yearly Solar Performance Payments

Published on by Dan Hahn.
Categories: Reports.

What are solar performance payments?

Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you’ll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!

Utility companies aren’t benevolent creatures and most don’t have deep pockets flush with Benjamins, why would they be giving anything away other than a rate increase?

That’s a great question. Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.

I need some visual explanation of this, too many words. I’m confused.

Fine. Check out this video:

Why are some utility companies paying people in certain states, but not all?

Some states have strong renewable portfolio standards, and other states do not! For those that do, SREC exchanges develop and homeowners get paid. For those that don’t, you are mostly out of luck, even if you live in a sunny state like Mississippi.

How many SRECs does a typical solar system crank out a year?

It’s usually about a 1 to 1 ratio between SRECs and the size of your solar system. For example, a 5kW solar system will pump out about 5 SREC credits a year.

Why are SREC credits are worth different amounts in different states?

The variation in SREC credit amounts is largely dependent on the size of the alternative compliance fee imposed on utilities for not meeting their targets by the specified year for solar energy generation in the renewable portfolio standard.

Aside from SRECs, what other payments are there?

Some states and larger municipalities have adopted pilot feed-in tariff programs, which pay homeowners a set amount per kilowatt hour of electricity produced from the panels, usually at a considerable premium to the going rate of electricity. Those yearly estimates are also outlined in the left-most column. For example, Washington and Oregon have great feed in tariff programs.

I checked out part 3 of your snazzy report, and my state doesn’t seem to have a strong RPS. Why are there SREC credits even available to me?

Even though many state legislatures have not stipulated a specific solar set aside in their RPS, the rules in states that do are lax enough to allow bordering states to participate in state renewable energy credit (SREC) exchange programs. Those states are illustrated below in this informative infographic from SRECtrade:

A special important note though, for homeowners to participate in the SREC programs in Pennsylvania and DC, your utility company needs to be part of a special district called the PJM, outlined below:

SPR Report Card 2010 – Part 4 – Solar Incentive Summary Grades

Published on August 19, 2010 by Dan Hahn.
Categories: Reports.

About the chart above:

Here’s this year’s solar incentive summary breakdown by state. The incentives portion of the report is worth 50% of the total overall report card grade (See the green sections of the weighted pie chart).

The graded sections are described in detail here and the weights used for scoring are in parenthesis. Aside from the years to payback column which we covered in Part 1, each of the following will be covered in more detail later.

SPR Report Card 2010 – Part 3 – Electric Utility Policies and Rates

Published on August 17, 2010 by Dan Hahn.
Categories: Reports.

What is an RPS?

State legislatures pave the way for strong solar energy incentives to flourish. How? By stipulating standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS).

If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.

What are Solar Set Asides? Why are they Important?

A solar “set aside” is a mandate the state sets in its RPS. This guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.

Some states have higher alternative compliance fees than others, and as you can see above, some states have more progressive alternative energy standards and deadlines than others do.

For instance, New Jersey has an overall RPS of 22.5% by the year 2020. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2020. Pretty good. However, New Jersey also has a specific solar set aside of 2% by 2021. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is the hottest solar market right now!

Why are Electric Rates Part of the Report?

The states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.

About the grades above:

We ranked the states based on the strength of their policies on a 1-5 scale. While 38 out of the 50 states have a renewable portfolio standard, only 17 states have a specific carve out for solar energy. Many states have passed legislation in 2010 to at least have some sort of standard in place.

This portion of the report is worth 30% of the overall state summary grade. The solar set aside is weighed at 15%, the overall state RPS is weighed at 10%, and the electric utility prices are weighed at 5%.