Scot Arey
July 2015
“It’s the economy, stupid.” How many times have we been reminded of that famous advice from a presidential candidate’s adviser in 1992 about keeping the campaign on message? Well, I have found reason to invoke that phrase once again! Policies matter with respect to economic growth. I’m going to explain how this is relevant to solar energy.
Putting solar on Texas rooftops is an economic boon just waiting to happen. It will pay dividends to the state today, in the future, and most importantly, for the decades to come as Texas grows more than we ever imagined.
I recently had the privilege of testifying before Texas House and Senate committees regarding the closing of loopholes that allow developers to restrict solar during “development phases.” It was a productive day and I was impressed by the thoughtfulness of the questions from legislators.
Still, I knew that my comments needed to hit a theme that was important to all the members of those committees. Well, here it comes: “It’s the economy, stupid.”
The financial math for solar is a no-brainer. Every solar system installed on a home or business is eligible for a 30 percent federal tax credit. At the hearings, I chose my words carefully:
“Every local installation earns a 30 percent federal tax credit that keeps dollars from the IRS in
Washington and instead puts those dollars into Texas consumers’ pockets – dollars they spend right
here in this state.”
It’s that simple. I tell my customers that this is the best way to pay their taxes. Put a solar system on your rooftop and the Federal Government will give you back a substantial portion of the taxes you’ve paid. What could be more satisfying to any Texan?
I’ve read reports that Texas has nearly 30,000 homes with solar right now. Let’s say we double this next year – not impossible and perhaps conservative based on the exponential rate of growth of residential solar. If each of these homes installed a system with an average value of $20,000 (about a 6kW project, producing roughly 10,000kWh of electricity per year), that would be $180,000,000 of federal taxes that stayed in Texas.
Here is where any policy wonks out there should pay attention. I’m no economist but I’m intrigued by the multiplying effect of dollars in a local economy. I was first introduced to it in real life when we were estimating the local value of a solar manufacturing plant in San Antonio. A term that is used on the consumer side is “marginal propensity to consume” and it refers to how locally retained dollars (that is, the money the consumer does not have pay for the installation due to the tax credit) will be spent on other products and services. Imagine what $180 million looks like spent though the Texas economy many times over. Add in the now-avoided electric utility costs and the economic impact further increases. (Note to some graduate student – make yourself famous and write a thesis on this subject.)
Of course it’s not just the federal tax cut that we give ourselves. The material portion of every solar installation is subject to state and local sales taxes. I know my company, has performed enough installations to offset the annual pay of a couple of teachers in the Killeen school district. More specifically to our example, the 30,000 homes with solar could generate nearly $34 million (30,000 homes times material cost of system, times about 8 percent) in state and local taxes that would certainly help our communities.
Finally, imagine the jobs created! Texas has been gaining in this area, but despite our vast solar resources we are only sixth nationally in solar industry job creation. Last year, I wrote a Solar Reflector article that pondered how cloudy Massachusetts could ever rank higher than Texas for solar jobs. The answer is that Massachusetts has very supportive pro-solar policies which have sent a clear message to consumers and industry alike: Massachusetts is eager for solar energy and wants the jobs that come with it.
Words matter. So does the perceived message that is sent by our leaders’ comments and legislative policy. Political leaders must embrace the direction that consumers wish to go and that leads to long-term economic growth.
The Texas Renewable Portfolio Standard, originally passed in 1998 and increased since then, obtained for our state the number one position in wind energy. Now is not the time, when the nation is on the cusp of a solar revolution, to ditch that standard, saying that it already “accomplished its mission.” What does that say to industry and consumers about Texas’ tradition of energy leadership?
Instead of abandoning the field to the policies of other states, imagine if our leaders said something like this:
“Texas has met its original Renewable Portfolio Standard many years ahead of schedule. The RPS is
how we set audacious goals for our state. This session, we’re raising the bar with the goal of
300,000 Texas homeowners installing distributed solar at their homes, farms, ranches, and businesses
by 2025 to ensure that Texas dollars stay right here in Texas, to build our economy with well-paying
jobs and to help us address the electricity challenges we’ll face in the decades ahead.”
I bet that bill might affect some national perceptions and industry investment.
Scot Arey is the Chairman of the TXSES Board of Directors and President of Solar CenTex, a solar installation company in Killeen.
»
- 97 reads