Congress extends tax credit through 2018 to spur alternative energy

By Greg Ruland Wednesday, December 23, 2015 A retired cabinet maker on Grand Junction’s north side borrowed $30,000 to install a solar array atop his home workshop this fall, one of several moves the middle-aged man made this year to get his “ducks in a row” before age or happenstance prevents him from making decisions on his own. The retired craftsman said his choice to go solar was motivated by several factors, saving thousands of dollars in energy costs chief among them. Without the 30 percent investment tax credit currently available to offset the purchase, however, Mark Blair said he would have deferred. “We couldn’t have done it. It’s just too much money,” he said. Blair said he will apply the money he would normally pay to Grand Valley Power to pay off the loan through Atlasta. Blair borrowed through Atlasta. His return on investment is not expected before he repays the loan. Solar panel vendors across the country rejoiced last week when Congress extended through 2018 the 30 percent investment tax credit on solar energy installations. Starting in 2019, the credit will taper off in yearly increments of 10 percent through 2022, after which it will presumably expire, “Scientific American” reported Monday. The credit, which applies to both residential and commercial property, is a dollar-for-dollar write down on federal tax owed in the year the array is purchased, said Teddy Aegerter, a sales associate at Atlasta Solar Center, 1111 S. Seventh St. For Blair, that means a savings of $10,000 on his 2016 income tax. “With the federal tax credit set up to expire in 2016 ... people were really rushing to get it for 2015,” Aegerter said. “It actually increased our business because people wanted to take advantage of the tax credit (before it expired).” Business picked up dramatically at Atlasta starting in September. Sales have been strong through the fourth quarter, he said. “The credit is used when homeowners (like Blair) purchase solar systems outright and have them installed on their homes,” Aegerter said. For residential projects, homeowners like Blair apply the credit to reduce personal income tax. For commercial projects, the company which “installs, develops or finances” the solar arrays takes the tax credit. Atlasta works mostly with homeowners, he said. In another positive development, homeowners are enjoying a quicker return on their solar investment since the cost of materials for solar panel production has gone down in recent years. Cheaper systems have expanded the motivation of solar array buyers, who now see the purchase as a way to market their home. Financing is available through Atlasta from a Salt Lake City bank that specializes in home improvement loans, but there are many ways to pay. Wrapping the purchase into a mortgage refinance, for example, is another option, Aegerter said. “People are getting an average return on their investment (through savings on electricity) within six to 10 years,” he said. “It’s an added value. For every $18,000 you invest, you can expect a return of $20,000 when you sell.” Blair said he was skeptical he would see any return on his investment before 2027. Since the tax credit was introduced in 2006, the value of solar energy array transactions has grown 1,600 percent across the U.S., reflecting “a compound annual growth rate of 76 percent,” the Solar Energy Industries Association estimated. Projecting a rosy future, the association said investment the tax credit extension will: ■ Add 72 gigawatts of new capacity to the nation’s electrical grid by 2020. ■ Push net solar capacity to more than 100 gigawatts, or roughly 3.5 percent of all electricity produced in the U.S. ■ Increase investment in solar by $40 billion between 2016 and 2020. ■ Double the current number of jobs in the solar industry to 420,000. The move will also help states comply with the federal Environmental Protection Agency’s Clean Power Plan, which launches in 2022 and requires a 32 percent cut in utility-sector carbon emissions from 2005 levels by 2030, “Scientific American” reported. “Some states (will see) reduction requirements as high as 45 to 47 percent” as a result of the plan, the magazine said. The leader of the Colorado trade association representing solar was even more confident about the effects of the extension, predicting “$125 billion in new, private sector investment … and … a tripling of deployed solar by 2022.” “The extension will provide certainty to our industry,” Rebecca Cantwell, Colorado Solar Energy Industries Association executive director, said in a news release.

Colorado officials consider limiting solar energy’s access to farmland

In Weld County, not all energy production is created equal. If a proposed ordinance goes through, solar farms won’t enjoy the same access to agriculturally zoned land — which covers about 75 percent of the county — that oil and gas drilling and coal mining enjoy. The potential law requires all solar facilities sit on land zoned industrial, which is more expensive to lease. Early indications are the commissioners aren’t totally sold on the change. They took the proposal to the public for the first time during their meeting Monday morning. Residents will have two more chances to sound off on the issue before it can be adopted. Business owners and local farmers took this first opportunity to voice their complaints. SunShare, a small Denver-based solar company that works with Xcel Energy, has plans to install three small facilities in Weld in 2016, but that might change if the ordinance is approved. “This proposed ordinance kills solar,” said John Sullivan, a SunShare spokesman. “We’re not going to move to Weld County (if it gets approved).” The ordinance would restrict development on agricultural land. Now, there are few things people can do without getting special permission, called a use by right. For example, residents are allowed to build one house, raise crops and feed livestock. Some projects have to go through the use by special review process, such as oil and gas storage and coal mining. Related: A state-by-state look at renewable energy requirements Oil and gas drilling is considered a use by right, but the commissioners are considering a rule that requires a USR for all new facilities. The proposed rule would boot solar facilities from the list of USR uses on ag land and push them onto the list of industrial uses. The change in code — as it’s written now — would keep residents who own farmland from allowing companies to install small solar projects on their land, and it would keep solar companies from buying property to turn into solar facilities. Melinda McKey’s family recently bought 140 acres of dry land. This means the land is zoned for agriculture but doesn’t have irrigation access. She and her family, like many Weld farmers, struggle to make money on a farm with no water. “You’re very limited in the crop production,” she said. “We’d like to get more income from solar.” Richard Miller of Clean Energy Cooperative advocated for community solar farms. These smaller operations work like community gardens; they let people who don’t have the resources for solar panels — apartment dwellers or people with weak roofs — invest in off-site solar panels and have the money they raise knocked off their power bill. Community solar gardens typically span 6-9 acres and produce 1-2 megawatts of energy, enough to power about 190 houses, Miller said. Large commercial facilities produce from 10-150 MW and can cover hundreds of acres. While large power companies might be able to afford the more expensive industrial land, it’s harder for the little guys. “Community solar would be priced out of the market,” Miller said. The company offers its services to save customers money, he said, and raising the cost of production would make the product prohibitively expensive. SunShare’s Sullivan argued four benefits of small, commercial solar farms, which are generally the same size as community farms: They don’t take up much space; they pose no inconvenience to surrounding areas; they actually can help farmers; and they could raise more revenue for the county. SunShare has three projects slated to go up in Weld in 2016, and each of them would cover 12 acres or less. “We’re not going to coat Weld County with solar projects,” Sullivan said. Unlike many industrial facilities, solar farms have no on-site employees, he said. There are no lights at night, no emissions and no sound. Small facilities such as the ones SunShare is proposing stay for about 20 years, Sullivan said. The time can serve as a break for the soil to replenish. If one goes onto an operating farm, the farmer can use the water that would have irrigated those acres somewhere else. He said though the solar farms would be on ag land, they would pay property taxes as industrial operations, which are charged a much higher rate. The commissioners were split on the idea of allowing all solar farms, big and small, to set up shop on farmland. Commissioners Sean Conway and Julie Cozad praised the idea of energy diversity, and Cozad said she felt landowners have the right to decide how to use their land. She also pointed out that other types of energy production are allowed through the USR process. Commissioner Barbara Kirkmeyer pushed hard for solar’s industrial designation, saying solar facilities are industrial in nature and don’t fit on farmland, which should be used for farming. She said other energy production depends on natural resources specific to one area. For example, oil drilling has to take place where there is oil. “It’s a natural resource, and it is where it is,” she said. “You can’t really zone oil and gas.” Similarly, wind patterns dictate where wind turbines can go. And farmers can plant around the turbines. “They’re not covering up 16 or 110 acres (like solar farms do),” Kirkmeyer said. The group did agree to consider making a condition to the code change that would make an exception for the smaller and community solar farms, especially ones farmers use to make more money. “That actually would make sense in an agricultural area,” Kirkmeyer said.

Federal budget deal extends tax breaks for wind, solar

Wind and solar power advocates applauded the federal budget deal awaiting congressional approval that would extend federal tax credits for renewable power by five years. While the lifting of the crude oil ban received the lion’s share of the attention in the budget compromise, the bill also renews the federal production tax credit, or PTC, that benefits the growth of wind farms, and the investment tax credit, or ITC, that discounts the expansion of solar power. The tax credits were expiring, but still would have funded pending projects through 2016. Texas by far leads the nation in wind power and the Lone Star State is poised to see a lot more solar growth in the coming years, according to state projections. The American Wind Energy Association said the deal, if ultimately approved as expected, would provide several years of predictability to encourage more renewable power growth, especially with the nation’s electric grid soon requiring additional renewable power generation as more coal-fired power plants are retired. “If this passes, our industry will get a break from the repeated boom-bust cycles that we’ve had to weather for two decades of uncertain tax policies,” AWEA CEO Tom Kiernan said in a prepared statement. “AWEA has sought greater stability in the credit, with an extension for as long as possible. This plan will drive more development, and near-term prospects look strong – especially as utilities, major end-use customers, and municipalities seek more low-cost, emissions-free renewable energy.” Still, there is some concern about the tax credit being phased out. The extensions include 2015, so the five-year period only runs through 2019 and their values start getting reduced after 2016. The PTC currently provides for a tax credit of 2.3 cents for each kilowatt-hour generated over a 10-year period. According to the budget deal, the PTC and ITC are extended through 2016, but then continue at 80 percent of present value in 2017, 60 percent in 2018, and 40 percent in 2019. As before, the rules will allow wind and solar projects to qualify as long as they start construction before the end of the period. “The later years of this agreement will provide some challenges that the wind industry will work to overcome with our employees, partners and champions,” Kiernan added. Despite such concerns, the Solar Energy Industries Association touted the budget deal as well. “By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America,” Rhone Resch, SEIA president and CEO stated. Resch contended that U.S. solar power will triple by 2022, hitting 95 gigawatts. That’s enough to power 19 million homes and represents 3.5 percent of U.S. electricity generation, which is up from 0.1 percent in 2010.

Diversity of Colorado’s energy sector stays strong, says new report

Despite struggles among coal producers and oil and gas companies, Colorado’s energy sector as a whole remains strong, according to the seventh annual “Resource Rich Colorado” report from the Colorado Energy Coalition. The coalition is an affiliate of the Metro Denver Economic Development Corp. The report was shared with the Denver Business Journal on Tuesday and will be posted to the EDC’s “Resource Rich Colorado” website. “Colorado’s energy industry is a top-10 performer in about every category, it’s a unique story,” Scott Prestidge, who oversees the EDC’s efforts in the energy industry. “When you think of the resources that are here and the talented workforce that’s here, our research and development resources and the universities, plus the collaboration and the reach across the political aisle when it comes to policy and business-to-business — one of the key takeaways is that amazing diversity in Colorado’s energy sector and that we’re a top performer in every category,” Prestidge said. The sector’s strength and diversity, plus the seven-year track record that the report has under its belt, has allowed the EDC and the Denver Metro Chamber of Commerce to argue in favor of federal policies that will support both traditional fuel sources as well as the renewable sector, said Tom Clark, the EDC’s CEO. “For us to see energy as an industry, and present it as an industry in the last several years particularly to the legislature, it’s taken a lot of emotional tension out of the discussions by providing factual data — which was one of our goals,” Clark said. “The fight was always to steal one sides tax incentive for the other. Now it’s a balancing act, such as opening markets for us producers of oil but also giving certainty to the cleantech center with a long-term tax credits for wind and solar,” Clark said. In August, the EDC and the Denver chamber joined with the Colorado Competitive Council, a business group, on a letter to the state’s congressional delegation asking its members to support lifting the decades-old ban on crude oil exports and also to extend the federal Production Tax Credit for wind power for several years. “We look for opportunities where we can work together,” Prestidge said. According to the report, Colorado ranks: Seventh in oil and gas production; Sixth in natural gas production; 10th in coal production; 10th in the total wind capacity with 2,583 megawatts worth of wind turbines operating; Ninth in solar power capacity with 316 megawatts; And 10th in the number of alternative-fuel vehicles per capita. Over the years, the report has chronicled major changes across the state’s energy sector. Since 2009 the cost of wind power has dropped 56 percent and solar power costs have dropped 78 percent, according to the report. The report estimates there will be another 400 megawatts worth of wind turbines installed in Colorado during 2016, plus an additional 290 megawatts of utility-scale solar power farms. And the amount of oil and gas produced per drilling rig working has climbed six-fold for rigs working in the Denver-Julesburg Basin, an underground cache of natural gas and oil that sprawls north and east of Denver to the state lines. The report indicated that the state’s energy sector, including both fossil fuels and cleantech, directly employs 74,720 people, which support an additional 188,890 indirect jobs throughout the state. The industry’s total economic impact in Colorado was $17.2 billion in 2015, according to the report. One surprise in this year’s report is that the number of people classified as working in Colorado’s “fossil fuel” sector has remained steady, at nearly 50,000 people, compared to 2014. That’s despite the state’s Department of Labor and Employment office recording thousands of unemployment claims from the “mining” sector, which in Colorado is dominated by the oil and gas industry that’s experienced months of contraction nationwide due to low commodity prices. That’s possibly because the “fossil fuel” sector, according to the chamber’s report, includes people working in the utility sector — including those working at power plants and on power line and related engineering projects — as well as employees working in the coal, oil and gas sectors.

Five Colorado firms get $4.35M in grants for research, infrastructure

Five of six applicants for state funds to support their infrastructure have won $4.35 million in grants, the Colorado Office of Economic Development and International Trade said Monday. The money comes from the Advanced Industry Accelerator Grant Program, a state program that has doled out about $18 million to more than 50 companies since its 2013 inception. "This is about helping them accelerate their growth so they can stay in Colorado," said Katie Woslager, the grant's manager. Only six groups applied for the infrastructure grant, which must be used to invest in programs, equipment or other capital. Applicants must also contribute twice the amount themselves or through a third party. For every dollar the state puts in, the applicant must put in $2, Woslager said. Boulder-based Manufacturer's Edge, for example, received $2.5 million from the state to build a 3-D metals printing research center. It's also getting $5 million from Ball Aerospace, Lockheed Martin, Fauston Tool and the Colorado School of Mines. In a separate application, Manufacturer's Edge won another $300,000 to create a pilot program with the Small Business Development Center to support manufacturers and help them expand. Barber-Nichols, an Arvada designer of rotating machinery equipment, was the only applicant to not get funded. The agency's other program grants are much more popular. The Early Stage Capital grant and the Proof of Concept grant had 93 applicants in the latest round last month. Other infrastructure grant recipients included: • Cyber and Space Operations Center, $750,000: a new research lab at the Catalyst Campus in Colorado Springs. • Southwest Innovation Corridor, $300,000: an effort by the Telluride Foundation and Fort Lewis Collage to spur high-tech innovation in southwest Colorado. • Solar Technology Acceleration Center ( SolarTAC), $500,000: a 74-acre test site for solar technology near Denver International Airport.

Solar Power Colorado 2016

Solar Power Colorado is not only the largest solar conference in the Rocky Mountain region, but it is known nationally for the exceptional quality of speakers, panels and business opportunities. As the solar industry faces an uncertain future with the scheduled scale down of the Investment Tax Credit at the end of 2016, it is especially critical that we come together and forge the path ahead. At Solar Power Colorado 2016, you will find top national experts addressing all the hottest issues in solar, from the fight to extend the ITC to the growth of battery storage, and from the debates about the future of Solar*Rewards to the challenges of new electric code provisions. COSEIA’s annual gathering is the year’s largest business-to-business opportunity for networking with solar industry executives, identifying new market opportunities, gaining insight into the latest thinking on policy and technology, and learning about exciting new solar products at the Expo Hall. When: 7th March 2016 - 9th March 2016 Where: Broomfield, Colorado, US http://coseia.org/conference/