Renewable energy tax credit: Should it stay or should it go?
What we found was remarkable. The existing tax credit yields a clear, significant net fiscal benefit to the state. For every PV tax credit dollar the state invests, the payoff includes:
-- $13.37 stays in Hawai‘i (what we would have sent out of state to import oil)
-- $44.70 in additional sales (from the oil savings circulated into the local economy)
-- $3.17 in new tax revenues (generated from those added sales)
Loudat's findings show that each PV installation also produces new jobs and additional local labor income. A typical 118 kW commercial PV installation, for example, yields 2.8 local jobs each year over the 30-year lifetime of the system.
Blue Planet believes that the tax credit stimulates private investment in renewable power, and these investments provide a community benefit. We also recognize that renewable projects draw federal dollars into Hawai‘i's economy that otherwise wouldn't be here. Dr. Loudat's study allows us to assess what these benefits are worth.
While Blue Planet supports the existing tax credit, we are backing a measure to reduce the tax credit from 35% to 20% over the next three years. This and other changes to the law are currently contemplated in the Senate Draft of House Bill 2417. Acknowledging that the price of PV systems has dropped dramatically, Blue Planet's position is that the state's share in incentivizing the systems can and should decrease. But it is also essential that we maintain the right tax credit "nudge" to help more and more families and businesses put solar to work for them—with long-term benefits for everyone.
Unlike other tax credits, the investment in renewable energy is not a one-shot deal. The state continues to reap economic benefits over the 30-year lifetime of the system--consider the oil costs offset, year after year. It makes sense in the big picture, too, when you look at all the other reasons we need to move beyond oil. The dividends pay off in more than just dollars--there's value in energy security and reducing CO2 emissions, too, and these are benefits that other tax credits don't provide.
As Van Jones wrote in Rebuilding the Dream, "As we think about a new economy, perhaps we can begin to apply some new math — and begin to count what really counts. The earth counts; our kids count; the future counts. Where economic and energy policy meet, we should calculate not only what we spend, but also what we save. And we should consider the payoffs from the investments we make in human and natural capital."
"Often-overlooked benefit of solar is how it benefits the economy" Editorial by Jeff Mikulina and Dr. Tom Loudat, Honolulu Star-Advertiser
"Study: Hawai‘i solar tax credits pay off" by Duane Shimogawa, Pacific Business News
"Blue Planet: Renewable energy tax credit boosts local economy" by Sophie Cocke, Honolulu Civil Beat
"Sun, Shine" by Derrick DePledge, Honolulu Star Advertiser (Clever headline!)