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With the Legislature set to adjourn in just two weeks, supporters of solar energy tax credits are ramping up their efforts to hang on to incentives they say are needed to ensure the industry’s continued success.

Blue Planet Foundation, a clean energy advocacy group, released a this week that shows the state is collecting more money in tax revenues than it is losing in credits. The report was done for the group by local economist, Thomas Loudat, who conducted a similar 2002 study for the Energy Efficiency Task Force.

Jeff Mikulina, executive director of Blue Planet Foundation, said that the study refutes arguments that the tax credits are taking money away from other state priorities.

Critics, including Rep. Pono Chong as well as the state tax department, say that companies have been taking advantage, or misinterpreting, the intent of the tax law by installing multiple systems on a single rooftop so customers can take more than one tax credit.

Chong has argued that the practice is siphoning money from the state at a time when Hawaii is struggling with budget cuts affecting health care services for the poor and bus service for elementary and high school students, among other things.

Mikulina says the report shows that’s not the case.

“The basis of the argument about needing the money for school buses — that was the genesis of doing this report,” he said. “If we are serious about school buses and Medicaid then let’s support the solar industry because that is going to yield more money in the state budget.”

The report found a significant pay back to the state from its investment in the solar industry.

“Findings show that the existing tax incentive yields a clear, significant net fiscal benefit to the state,” according to Blue Planet’s summary of the report. “Every commercial PV tax credit dollar invested yields $13.37 that stays in Hawai‘i and $44.70 in additional sales, which generates $3.17 in new tax revenue. For a typical 118 kW commercial PV installation, the state gains 2.8 local jobs each year over the 30-year lifetime of the system.”

The current law allows homeowners to take a 35 percent credit for the system’s cost or a $5,000 refund, whichever is less. For commercial projects, the credit is 35 percent or $500,000, whichever is less.

As an alternative to the proposal, the solar industry is backing a plan that would get rid of the $5,000 and $500,000 caps. And as a compromise, the tax credit would be reduced during the next few years to 20 percent.

But the state tax department said this wouldn’t help control costs to taxpayers, nor clarify the original intent of the 2009 legislation, which was to only allow for one tax credit.

“The House is actually attempting to control the overall cost to all taxpayers,” said Mallory Fujitani, a spokesperson for the Department of Taxation. “The Senate version doesn’t have that same type of restriction.”

Loss of Business

Local solar companies have negotiated millions of dollars in contracts set to break ground in the coming months, which the Hawaii Solar Energy Association concedes take into account multiple credits for single rooftop arrays. If the amendment were to pass, it could jeopardize this business.

Gabriel Chong, president of the Hawaii Solar Energy Industry said it “would severely hamper business.”

“Solar leases for residential homes allow homeowners without upfront cash, that don’t want to line up equity, to purchase a system to get a lower rate,” he said. “If a contractor can’t come up with a rate competitive to HECO’s, there is no reason to go with the (contracted) system or lease. So if they decide to take that away, there will be a lot of businesses that don’t have that equity or cash.”

But some say that prices have fallen so much for the solar that the industry can survive without the crutch, and that the state should more aggressively decreasing the incentives.

“If anything, with PV now having reached an economy of scale, substantial price reductions and mass adoption in the state, it’s time to ramp down rather than increase the tens of millions coming out of the general fund going to PV installing taxpayers,” said Marco Mangelsdorf, president of Big Island solar company, ProVision Solar by email.  “Limiting the renewable energy tax credit per (tax property number) in addition to decreasing the percentage over the next several years makes more sense and restores a greater fairness.”