One of the largest rooftop solar companies in the country supports allowing federal tax subsidies for its industry to end at the end of 2016, saying flaws in the clean energy tax program have led to higher costs for the industry.
John Berger, CEO of Sunnova Energy told the Washington Examiner that allowing the solar Investment Tax Credit to drop is the direction the industry should be taking.
He said the industry’s preoccupation with federal subsidies is distracting it from more important concerns. That is especially true, he says, as the industry is beginning to resemble something more akin to a conventional power plant utility than a fledgling outlier, as it grows in scale and market strength.
“What we’re saying, to be clear, is not to kill or expire the ITC, but to keep the deal that was struck seven years ago” by Congress, Berger said. “And that was to take it from 30 [percent] to 10, and 10 would be in perpetuity. On top of that, we have accelerated depreciation that’s going to stay,” which allows a company to recover the cost of an asset over a specified period of time, he said.
“Our position is that we just want whatever is there now, which is 10 percent and accelerated depreciation. Thumbs up, that’s what we want to keep.
“Would I prefer to see the ITC totally gone? Sure. But from our position we’re trying to be helpful and reasonable and work with other folks” who want to keep it in place, Berger said.
He said the tax credit has led to higher costs for the companies that Sunnova works with, which install solar panels on rooftops, and are fundamentally different from the large utility-scale solar plants that are his competitors. “We have a different perspective because we’re actually made up of entrepreneurs and small businesses, as opposed to my competitors,” he said.
“We are bringing the small voice to the table,” which “is simply that there are flaws with the Investment Tax Credit,” he said.
Berger sat down with the Washington Examiner after a round of talks he had on Capitol Hill Thursday and Friday with members of the Republican and Democratic leadership in both chambers of Congress. He had just left a meeting with House Democratic Minority Leader Nancy Pelosi of California before sitting down for the interview.
Berger used California as an example of how local and state subsidies for solar had phased out to zero, and the industry is growing.
“California had this huge initiative, and spat out tens of millions of dollars and now it’s zero, and the industry is booming more than ever,” he said. “Everybody thought the end of the world was going to happen there too … but it didn’t.”
But unlike local subsidies “which are pretty much gone” now, the federal credit “is constructed to inflate cost,” Berger said, calling it a major flaw that few want to address.
The ITC allows a developer to receive a tax credit on 30 percent of the value of the asset such as a solar panel. “You would rather have 30 percent of a higher number than 30 percent of a lower number,” he said. That creates an “incentive that is counterproductive to the industry to keep the cost higher,” which he says is ultimately harming his business, not helping it.
He said the solar industry needs to get past tax subsidies and begin focusing on more important issues. The industry is maturing, with equipment costs falling, making the tax credits less of a concern.
“Ironically, right now — the industry goes through this every two to three years — there is an equipment price drop” occurring, he said. “We are going through that right now. So, it seems really odd that we are sitting here, like ‘ah, we can’t make it work,’ when equipment it careening down in price.
“It’s foolish to think that is going to stop,” he said. “It’s going to continue its downward trend.”
He would rather the industry think about a more comprehensive energy plan that would address the problems it faces in penetrating the market controlled by large, conventional investor-owned utilities.
“There are issues with [interconnection costs] and they are becoming more frequent as the industry is growing up and … becoming conventional energy.” The costs are imposed by utilities that can jack up the cost of projects by tens of thousands of dollars. “If we don’t solve those issues, it won’t matter if we have a 90 percent tax credit,” he said.
“I think we should focus on leveling the playing field,” he said. But the “real issues” involve “how our customers interact and intersect with the grid, the monopolies that are utilities. And that is the larger, tougher discussion to have.
“ITC or no ITC, we need to have that discussion.”
