Four years ago, Louisiana lawmakers wanted to give solar energy a boost in the state, so they passed the Wind and Solar Energy Systems Tax Credit. Businessweek reports that fiscal analysts when the tax credit was passed anticipated lost state tax income to be under $500,000 annually.
At the time the tax credit was instituted, there were only two solar installation companies in the state. But now the state’s solar industry is booming with over 200 licensed solar installers operating around the area.
Local solar business owner (and executive director of the Louisiana Solar Energy Society) Jeff Shaw said the industry “exploded” in 2008 when the tax credit was passed. Shaw describes Louisiana’s program as “the best tax credit in the nation.” Currently the tax credit is worth 50% of the cost of an installed system for a maximum of $12,500.
No one is more surprised at the tax credit’s popularity than the state itself: the Department of Revenue reported that Louisiana has actually spent $37 million on the program, 18 times more than expected when it was originally enacted in 2007.
State lawmakers are divided on the issue. Supporters focus on the positive aspects that have resulted from the tax credit, including the many new jobs for the state as well as sales and income tax revenue that they say outweighs the credit’s cost. But critics say that the solar tax credit overages are part of a much larger over-spending problem that ends up shortchanging vitally important institutions like education, health care and more.
“I love solar. It’s a great clean energy, but let it pay for itself. We’re cutting education and prisons and other things,” Clyde Holloway, a member of the Louisiana Public Service Commission, told Businessweek. The PSC regulates utilities for Louisiana.
At the very least, the state will be reforming their tax credit process to lower solar payouts. They will be requiring more detailed information about the systems installed and limiting the credit claim to only one party instead of both the homeowner and the installer.
Louisiana is also considering adding an expiration date to the program so that it could then come back up for a more extensive cost-versus-benefit analysis at that time.