Will I Be Jobless December 31, 2016?
This year’s Climate and Society class is out in the field (or lab or office) completing a summer internship or thesis. They’ll be documenting their experiences one blog post at a time. Read on to see what they’re up to.
By Katherine Spevok, C+S ’15
The Investment Tax Credit (ITC) was established in the Energy Policy Act of 2005. It was originally supposed to end after 2007 but was extended under the Tax Relief and Health Care Act of 2006. In 2008 Congress again extended it for eight years through the Emergency Economic Stabilization Act of 2008. In 2009, under the American Recovery and Reinvestment Act, the $2,000 monetary cap on the tax credit was removed enabling utilities to access the tax credit.
The ITC is a dollar-for-dollar reduction in federal income tax for residential and commercial solar projects under the aforementioned acts. The tax credits are awarded through a provision that allows qualified projects to collect tax credits for 30 percent of eligible costs. But it’s scheduled to shrink to 10 percent after December 31, 2016. Since revenue is so low during the first few years of a project, solar developers market these credits to financial institutions that have income that can be offset by the tax credits.
That’s where my job comes in. I currently work for Solaire Generation, Inc., a company that designs, develops, fabricates and installs solar carports. Our business model relies on that fact that developers will be able to finance solar projects.
Offsetting 30 percent of a project cost is a huge part of being able to create financing opportunities with reasonable returns to investors which are generally around 8-10 percent. As solar energy slowly reaches grid parity, meaning solar energy can generate power at a levelized cost of electricity that is less than or equal to the price of purchasing from the grid, the role of the ITC diminishes.
The solar industry now employs 174,000 people in the U.S., more people than the oil and gas pipeline industry, the coal mining industry and the iron and steel manufacturing industry making it a vital aspect of the U.S. economy. In addition, while coal and natural gas development is limited to select states, the solar industry puts people to work in all 50 states.
While the ITC certainly plays a central role in the development of the solar industry, I would argue that it is not as necessary as it was when in was established in 2005. I disagree with the reduction to 10 percent; it should be a gradual 5 percent decline over the next 5 years to enable solar energy to truly get to grid parity as electricity prices continue to rise while new technology costs continues to fall throughout the solar energy industry. I certainly think that with time, the industry can thrive independent of any subsidy.
Last month at the booming Intersolar trade show, you would never know that an entire industry could come crashing down 18 months from now. While there was some talk and light-hearted jokes about it, the majority of the industry thinks that solar energy will be able to survive the reduction of the ITC. At one point I glimpsed two college age students navigating their way through the tradeshow wearing vests protesting the decline in the ITC and asking for signatures. They never made it my booth, nor do I know what I would have done if they had.
On a daily basis I respond to Requests for Proposals, provide pricing, layouts and proposals to potential clients, sit in on phone conversations for future projects and stay up-to-date with relevant industry news. You never would never know that the industry was changing except for an increased sense of urgency for project completion as lead times approach the end of next year and new talk of labor shortage in the electrical and construction communities emerge as more projects are expected to be completed during next year.
Just last week New York Mayor Bill de Blasio announced a Request for Information to identify new renewable energy generation capacity, with a goal of powering 100 percent of City government operations from renewable sources of energy. Something tells me that solar energy will play an integral role in this goal.
Existing law in California requires renewables to make up at least 33 percent of electricity sold to retail customers by 2020 with new proposed legislation calling for a 50 percent petroleum cut in the transportation sector over the next 15 years. I think we can all agree that solar energy, which can be used to power electric vehicles, will play a significant role in achieving these standards. Nationwide, solar energy makes sense and it’s not going anywhere anytime soon.
As the demands from consumers and lawmakers change, the solar industry continues to adapt. Initially, Solaire Generation had one product, a premium solar canopy. Over time the company developed new products to meet clients needs and meet changes to the industry. Our product line now includes anything from parking garage mounted solar canopies to solar canopies with integrated electric vehicle charging stations. Solaire Generation is a prime example of how the industry continues to innovate and adapt to changes in technology, legislation and consumer demands.
In the few months I’ve been here I’ve learned a tremendous amount about the industry diving head first into client meetings and sending out proposals. On the second week on the job, the Business Development Team went out for a site visit to see our product first hand. We visited the largest solar parking canopy installation in the U.S., an 8 MW project at Rutgers University that’s transformed a 28-acre parking lot in a beautiful solar power plant. Even more exciting, I flew out to San Francisco last week to attend my fist trade show.
Intersolar, the second largest solar tradeshow in North America, provided an excellent opportunity to test my knowledge of the company, network with industry leaders,and learn the in-and-outs of the industry. The experience that I have gained in such a short amount of time at Solaire Generation is a testament to what an exciting time this is to be involved in a growing, transforming and innovative industry. I look forward to the opportunities and challenges that this industry brings my way.
Oh, and no, I won’t be jobless come December 31, 2016.