As lawmakers seek budget savings and regulators mull net metering options, 2015 is shaping up as a year to remember for Louisiana’s solar industry.
One of the state’s leading pro-solar groups, the Gulf States Renewable Energy Industries Association (GSREIA), is promoting a spirit of compromise as legislation advances that would reduce solar incentives but keep tax credits in place through 2017.
At the same time, PosiGen, a top solar leaser, is questioning the leading bill, saying H.B. 779 would hurt solar investments in Louisiana.
Looming in the background is the Louisiana Public Service Commission (PSC), where some members have raised concerns about the state’s solar policies.
A controversial draft report compiled for the PSC and released earlier this year found negative effects from solar, though it was dismissed by several advocacy groups as flawed (EnergyWire, March 5). Commissioners are expected to examine net metering, or how solar users can seek credit for excess energy, sometime this year.
"I think it’s important that we all acknowledge that we need to make changes and it’s going to have to happen on all sides," said Jeff Cantin, president of GSREIA. "But it can’t be a lopsided solution in any way."
Cantin said the goal is to help Louisiana keep realizing benefits from solar and preserve as many of the roughly 3,600 solar-attributed jobs as possible. All the while, there’s a giant hole in Louisiana’s budget, forcing state leaders to make tough fiscal choices around tax breaks and state incentives.
Several solar-related provisions are in H.B. 779, which passed the Louisiana House of Representatives this month and is making its way through state Senate committees toward a floor vote.
Cantin said the solar industry is open to a lower tax incentive. The House sponsor, state Rep. Erich Ponti (R), told a Senate panel the bill treats solar sales and leasing differently and includes language on tax credits.
"We worked with the groups to get where we are today, and it’s a great starting point," Ponti said.
The bill could boost state general fund revenue by about $35 million over a three-year period, according to a state estimate. It keeps the current language for a solar system installed between 2008 and June of this year, and under the program today, a homeowner could receive a tax credit of 50 percent of the first $25,000 of a system’s cost.
Under the new plan, starting in July, the maximum amount of credit for a system purchased before Jan. 1, 2018, would be for no more than $10,000 under various conditions. On the leasing side, starting in July, a system is supposed to cost no more than $2 a watt and provide no more than 6 kilowatts.
A key point in the pending bill is introducing a $10 million annual cap on credits for leased systems in calendar years 2015, 2016 and 2017. If the amount of credits applied for in a year surpasses the amount authorized for that year, the extra amount is to go toward the subsequent year. No credits are envisioned for systems installed after Dec. 31, 2017.
The bill generally would delete tax credits for solar thermal systems, leaving a focus on photovoltaic installations. It also seeks to have the cost and installation financed for no more than 48 months.
"It’s very important that this isn’t seen as an attack on the solar industry," Cantin said. "I think there have been deliberate efforts to go after the solar industry by certain parties, but this was brought forward by the solar industry to help the state meet its needs" and preserve jobs, he said.
But Beth Galante, a vice president of business development and government relations with PosiGen, which does solar leasing, told the state Senate committee the bill is "seriously flawed" and could result in the loss of hundreds of jobs. The primary issue is what she called a retroactive structure that could affect people who made investments earlier this year.
"We think that homeowners deserve energy choice," Galante said. "Solar leasing is the only way — the only way — that 75 percent of Louisiana homeowners can afford solar, because not many of us can just write a check for the full cost and, frankly, not a lot of our Louisiana working families can qualify for a loan to go ahead and buy panels."
GSREIA itself doesn’t have a position on the bill, according to Cantin. But he said outside groups have been targeting solar leasing.
Monopolies and subsidies
Casey DeMoss, CEO of the New Orleans-based Alliance for Affordable Energy, said in an interview that her group supports policies that make solar affordable for everyone, including through leasing. She called it "frustrating" to see disagreement within the solar industry.
Yesterday, DeMoss told the committee her organization didn’t have a position on H.B. 779, but she did promote competition in the power sector while saying parties interested in traditional business models can see solar as a threat.
"What I’m worried about, and why I’m here, is that the process of making these decisions has been grossly manipulated, I think, by the monopoly utilities for the sole purpose of maintaining a monopoly business model," she said.
Lance Brown, executive director of the Partnership for Affordable Clean Energy (PACE), said in emailed comments that H.B. 779 and similar approaches are needed to have a sensible energy market. PACE’s website lists official partners that include a number of business groups in the U.S. Southeast.
"We believe that generous taxpayer subsidy for rooftop solar and retail net metering are examples of heavy-handed government policies that ultimately skew the marketplace and hurt most customers, and we support measures that would alter those policies for the better," he said.
Several speakers backed H.B. 779 at yesterday’s Senate committee meeting, including Tucker Crawford, a co-founder of South Coast Solar. He called the bill "appropriate" and said he sees the industry standing on its own feet one day.
Entergy Corp., a New Orleans-based power company, didn’t detail a specific position on H.B. 779 when asked recently. Entergy said via email that its Louisiana utilities think solar can be part of generation for the state, but the company said such resources need to be incorporated fairly to avoid shifting infrastructure costs to people without solar.
"In the solar issue arena, Entergy has consistently advocated for the fair treatment of all customers and proposed constructive solutions that balance the interests of all stakeholders," the company said.
Louisiana lawmakers began their session on April 13, and final adjournment is set to occur by the evening of June 11.
Meanwhile, Eric Skrmetta, a commissioner at the PSC, said in an interview earlier this year that it would be prudent for the commission to see how state lawmakers deal with solar incentives before taking its own action. He said he thinks there are better uses for money slated for solar tax credits.
With net metering, customers can send extra power to the grid for credits to reduce bills. Net metering users in Louisiana can receive the retail price of electricity for such power.
Louisiana regulators have discussed potentially changing rates and removing a cap on how much net metering can be put in place, as the state allows a utility with net metering purchases that exceed 0.5 percent of its retail peak load to no longer accept net metering applications.
DeMoss has called for the cap to be lifted because it limits the number of people who can have solar, and she also has indicated openness to a solar grid fee.
Kim Sanders, a senior manager of public policy at Sunrun Inc. and a spokeswoman for the Alliance for Solar Choice, said there’s "a lack of stability for businesses in the state" as utilities bump up against a cap on net metering.
"The commission needs to act to ensure that these businesses are able to keep their doors open and that jobs are not in peril," she said.
PACE’s Brown called for a "more equitable and sustainable model" for everyone.
"The legislative session can help set the stage for PSC action, hopefully creating momentum for a better approach to solar in Louisiana," Brown said.
Regardless of the state’s moves, New Orleans is seeing favorable attention for its solar efforts. Electricity utility offerings in that city generally are regulated by the City Council as opposed to the PSC.
New Orleans was at No. 10 in a study of installed photovoltaic capacity in U.S. cities at the end of 2014, according to the Environment America Research & Policy Center. And Entergy New Orleans recently announced a pilot project for utility-scale solar.
For those who want to see changes at the state level, the ongoing legislative session and expected PSC discussions offer potential.
GSREIA’s Cantin said the solar industry has been willing to discuss what "net metering 2.0" might look like in the future.
"The way that we should move forward is not to get obsessed with a certain solution," he said.