Thurston: tax credits for planting trees, not erecting solar panels

Solar panels – or trees?

by Steve Thurston

An important aspect of Vermont’s solar policy is being completely ignored — the Ponzi scheme of subsidies that props up this industry. If the Legislature would focus on who’s paying for all these solar panels and how much it is costing us, it would become obvious that solar panels are a waste of taxpayers’ and ratepayers’ money for the environmental benefits achieved.

In an effort to unravel the Gordian knot of solar project economics and legal jargon, I came across a pro-solar website that lists the incentives for solar on a state by state basis, and grades states according to the generosity of their subsidies. Not surprisingly Vermont gets high marks. The solar proponents at Solar Power Rocks claim a 9.9 percent internal rate of return over the projected 25-year life of a typical 5-kW (5 kilowatt) residential solar project, which costs about $20,000 to install. “The internal rate of return for this investment is an amazing 9.9%.”

With banks offering low interest on savings accounts 9.9 percent is a very enticing prospect these days. It is not surprising that Vermonters are signing up in droves in response to the advertising campaigns of solar panel providers.

But a different picture emerges when the sources of funds that support this industry are examined, and when a much less costly alternative for achieving the same environmental benefit is considered.

Using the 5-kW installation referenced in the website, following is a breakdown on the subsidies that make this $20,000 investment so attractive:

If you invest in a 5-kW, $20,000 solar installation you are eligible for a first year federal tax credit of 30 percent, or $6,000. Then, over time, in addition to the savings for generating your own electricity which offsets the cost of the solar panels, you make an additional $27,000. “Over 25 years, your system will have produced over $27,000 in income, after your system cost is paid back.” This money comes from the following sources:

Your electric utility is required to pay you 5.3 cents per kilowatt hour (kWh) for all the electricity your panels produce for 10 years. This money comes from your neighbors who don’t have solar panels.

In addition to the 5.3 cents per kWh payment, the utility is required to credit your account (which may include property other than your residence) for all of your excess electricity for the same amount they would charge you for it, about 18 cents per kWh. However, this includes not only the retail price of the electricity but also the cost of operating the business and providing the lines, poles, transformers and repairs to the transmission system. This overhead cost is shared by your neighbors who don’t have solar panels.

You are given free Renewable Energy Credits (RECs) for each kWh generated, which can be sold (currently for about 4 cents per kWh) to fossil fuel generators who are required to purchase them to offset their own emissions. The fossil fuel generators then increase the price of their electricity to make up for the cost of the RECs, making electricity more expensive for your neighbors who don’t have solar panels. If you sell your RECs you cannot claim to be generating renewable energy with your solar panels.

Towns are not allowed to collect education property taxes for the value of your panels even though they add $20,000 to the value of your property. This increases the school tax burden on your neighbors who don’t have solar panels.

The state charges no sales tax for the roughly $15,000 worth of equipment, which is a loss of revenue that must be borne by all other taxpayers.

These subsidies add up to profits which are many thousands of dollars more than the retail value of the electricity produced by the solar panels. It’s free money for the solar panel buyers, so who can blame them for taking advantage of such a windfall? After all, solar panels are providing environmental benefits like reducing carbon dioxide, right?

However, as the above mentioned website perhaps inadvertently points out, there is a much cheaper and simpler way of accomplishing the same environmental benefit. According to Solar Power Rocks, a 5-kW solar installation will have the same environmental benefit as planting 106 trees each year.

“On top of the green that will stay in your pocket, your system will mean green for the environment, too – 106 trees-worth, every year!”

So how much are 106 trees worth? The Nature Conservancy’s Plant a Billion Tree program plants trees for $1 each on average: “One dollar is an average cost for a tree; actual cost depends on the location of the project and what kind of tree being planted.”

Here’s a suggestion. Let’s stop littering Vermont’s high value landscape with solar panels. Allow taxpayers and ratepayers to keep their money instead of subsidizing their neighbors’ solar panels and instead encourage the Legislature to allow taxpayers to take a yearly tax credit for $106 through the Nature Conservancy’s Plant-a-Billion Trees program or a similar program. If, over the projected 25-year life of a 5-kW solar project, the state instead provided tax credits for planting trees, the cost would be only $2,650 compared to taxpayer subsidies and income redistribution schemes that cost $27,000 – 10 times more expensive than planting trees!

Of course, if you want to buy solar panels to reduce or eliminate your own dependence on the grid, that’s your choice. But the rest of us should not be forced by state government to pay for your personal choice.

For those who say we should not turn our backs on “free” federal subsidies, regardless of the deficit spending that created or perpetuates them, imagine you are driving along and you see a sack of money worth $6,000 marked “U.S. Treasury” alongside the road. Would you be fiscally and morally responsible and return the money to the rightful owner, the U.S. taxpayer, or would look around to make sure no one was watching, grab the money, and then put up some solar panels?

The author is a Ferrisburgh resident and retired general contractor and home builder committed to energy efficiency and conservation as the critical path to reducing fossil fuel consumption. He was a founding member and co-chair of the Citizen’s Task Force on Wind Power in Maine. In 2011 he helped initiate a successful citizens petition to create a special section in Maine’s noise regulations to address wind turbine noise.

Categories: Commentary

5 replies »

  1. Mr. Thurston clearly shows the pretending and gaslighting surrounding “renewables”
    A 25 year payback from 20 year solar panels? The short answer is if large subsidy is required, the technology and costs do not work.

  2. The solar panel credit is another way to steal from those who cannot afford the initial outlay so that those who can, are able to virtue signal. What if your suitable buildings for solar panels such as barns and sheds are not oriented to the south? We have one small field but the distance from the house is too great for an efficient system. Our property is mostly in sugarbush. Because of this subsidy I have removed almost everything electric from my home. If I didn’t currently need access to the Internet I would go totally off grid and this is in the real sense.. no generator, no unconnected solar, no other fossil fuel sources of energy. Wood and mechanical devises work well for us.

  3. As a person who helped found an industry that also lies to people, I really have a hard time believing ANYTHING this man says. Weather, seasons do more to change the amount of power any of these things supposedly produce for power without fail. Wind besides the noise and killing birds and wildlife use power to just sit there. Solar if you ask is a red herring to support an industry that is designed to fail.
    People who fell for the scam are slowly regretting it and the cost to replace a broken system is astronomical. I am surprised at people who only use $100-200 in electric wanting setup as described. Math says it will take more than the life of the panels to pay for themselves, if not the life of the purchaser. Those things are as bad as billboards but to save the environment we must make sacrifices … for the better good. Even though it amounts to exactly nothing in the whole scheme of things.

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