solar credits

Are Government Solar Manufacturing Credits Worth The Money?

in Backup Power Systems

You can fire up about 50% of either side of the discussion on whether governement supported manufactring credits for solar are justified. In light of the statistic that 80% of Americas solar clean energy components are manufactured outside our boarder, isn’t there a strong argument for government continuing to suppliment solar manufacturing?

One such program is the “Advanced Energy Manufacturing Tax Credit”, which supports the building and equipping of factories to make solar products and one could argue, has been wildly successful since its inception. This much-needed influx of funds has helped private sector investment in solar energy production facilities while generating tens of thousands of new jobs in construction and manufacturing.

Couldn’t you argue that we need to seize every opportunity to enhance our ability to make the solar products of the clean energy economy in America and bring those jobs back home.

On the other hand, wouldn’t the money be better spent in giving the consumer the break via higher tax credits for installing solar? This would naturally stimulate the market to produce more solar installations and therefore benefit not only the solar developers but the consumer. Net effect equates to more local jobs, we slow our dependency on fossil fuels and homeowners are better able to control their energy costs.

We recently came across an article in Renewable Energy World by Dana Blankenhorn entitled “Are State Manufacturing Credits for Solar Justifiable?”. You decide.

There are few things that get me so mad as governments throwing the peoples’ money around. All sides have their constituencies. It’s a completely bipartisan exercise. The program that upsets me most is the “manufacturing plant incentive.” It’s usually a package of tax breaks and outright grants or loans designed to bring a manufacturing plant into a specific location.

Let’s be clear. The California solar plant or any other manufacturing plant is going to go in anyway, because it makes economic sense. This is money offered by local governments to keep plants from going to other, nearby jurisdictions.

If you’re into economic development, I believe a better way to play is to support higher education, research and entrepreneurs. That way, when it’s time to go into production your governor is cashing checks instead of writing them.

Makers of solar panels and thin film solar cells are now at the point where they can play this game. Governments are lining up to give them your money like it’s a carnival. Just to be clear. This is not a partisan rant. I’m going to now give you examples from both parties and both sides of the ideological divide.

In Wisconsin, outgoing Democrat Jim Doyle (left, above) recently used $28 million in solar manufacturing incentives to lure the W Solar Companies Group from California to Wausau, Wisconsin. The company claims it will build a $300 million solar factory and create 620 jobs over five years that’s about $45,000 per job. But don’t feel too sorry for California. Manta(dot)com says W currently has sales of less than $1 million a year and has four employees.

This is, at best, a crapshoot. The state is capitalizing this company. Are governors supposed to be investment bankers? But let’s be fair. W solar is moving lock, stock and barrel to Wausau. In theory there are some good paying research and management jobs to come from this.

Our other contestant today is Republican Haley Barbour. He has pushed through a bill loaning $75 million, plus tax breaks, to bring Stion Solar Panels into an abandoned Sunbeam factory (also built with state-backed loans) in Hattiesburg.

The company will share the building with what is now a Red Cross relief center. (Sunbeam originally had the whole thing, back in the day, when a previous Governor opened state coffers to bring its appliance manufacturing there.)

Barbour proudly notes there may be the fulfillment of 1,000 jobs coming in, paying an average of $43,000 each. Not counting the tax breaks, that’s $75,000 in government money loaned for each $43,000 solar job. And unlike W solar, Stion is staying where it is, in lovely San Jose. So is the heavy lifting, the management, the research effort, the profits. It’s a great deal, for manufacturers. Sunbeam thought it a good deal when it moved in, too. Then it went bust in about 7 years, according to the Hattiesburg paper.

How long might Stion Solar last? Maybe decades, maybe less. Barbour will be long gone before the day of reckoning he’s drowning in confetti right now (along with outgoing Gov. Doyle).

As a solar energy advocate, three cheers.