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State lawmakers and officials from Utah's solar industry have reached an agreement for phasing out tax credits for residents installing rooftop arrays, partly by increasing those incentives while they are still available.
Many said they have mixed feelings about the compromise to eliminate the tax breaks by 2021, which emerged this week on Capitol Hill and is now headed to a House floor debate.
In light of runaway growth in solar installations in 2016 that threatens to drain up to $60 million from state coffers this year, lawmakers recommended winding down the tax incentives for rooftop solar panels over four years.
Currently, Utahns can seeks tax credits of up to $2,000 for installing a residential solar system. The compromise, contained in HB23, would limit that to $1,600 beginning in 2018, then ratchet down the amount yearly by $400 until it reaches zero by Dec. 31, 2021.
The new phase-out plan also eliminates yearly caps lawmakers had considered on the total amount devoted yearly to the solar tax breaks, effectively doing away with limits on how many residents can seek the incentives.
Ryan Evans, president of the Utah Solar Energy Association, said the industry would have preferred to see the tax credits live on. But "realizing the political pressures and budgetary pressures this year, we aren't contesting this," Evans said. "Solar energy is becoming more and more affordable every year, and I think we can absorb this."
The advocacy group Utah Clean Energy has similarly agreed to drop its opposition to ending the state tax credit and to support the compromise, said Sarah Wright, the group's executive director.
On Thursday, Utah Clean Energy rolled out plans to grow the state's solar industry over the last 10 years — a key tenet of which calls for making solar affordable and accessible for all Utahns. But Wright said the compromise was fair and would protect the industry from an abrupt loss of revenues fueled by the tax breaks.
More than 17,000 Utahns signed up in 2016 for Rocky Mountain Power's net metering program, which allows solar panel users to sell surplus power back to the utility. That was nearly five times the 3,200 net metering customers the utility reported in Utah at the end of 2015.
Shane Perkins, co-owner of St. George-based Legend Solar, said the solar panel industry will have grown by 2021 to the point that it won't need tax credits anymore. There may be a slight decline in new solar installations when the tax breaks go away, he said, but it should be insignificant.
But Alan Naumann, a solar energy consultant for Rocky Mountain Renewable Energy, said he felt the industry needed to fight for clean energy, given the potential for economic and environmental benefits.
"We should be supporting all of this, gathering all the people in Utah to take advantage of these tax credits while we still can and not taking steps backward," said Naumann, adding that he was speaking for himself and not as a representative of his company
An official with Utah Citizens Advocating Renewable Energy (UCARE), a group comprised primarily of residents who own rooftop solar arrays, raised concerns the compromise does not require lawmakers to review the phase-out's impact on the solar industry each year.
"It's a growing industry," UCARE's Stan Holmes said, "but it could be tripped up."
Local environmental groups continue to oppose the phase-out, though none spoke against the compromise during a Tuesday hearing on the issue.
"We do not think that this is the appropriate time to be signaling to the solar industry that Utah is edging out of supporting the solar industry," said Lindsay Beebe, a local organizing representative for the Sierra Club.
Beebe said raised concerns about the fate of residential solar in Utah in light of a Rocky Mountain Power proposal to change how its net metering customers are billed for the power they use. That proposal would raise rates for most solar households.
Matt Pacenza, executive director of HEAL Utah, expressed similar concerns, saying he was disappointed that the compromise did not secure a provision requiring lawmakers to revisit the tax credit.
"It does strike me that they are making this decision on uncertain turf," he said. "It could be that in 2018 we're looking at a completely different picture."
Wright, with Utah Clean Energy, said the state Public Service Commission's pending review of Rocky Mountain Power's rate request on net metering, now scheduled for August, leaves the solar industry uncertain about the future.
"The issue is, the solar industry doesn't know what will happen with that rate case," she said. If Rocky Mounta Power is granted its request, then the industry might still need the tax credit. But "if we get a fair outcome in the case," said Wright, "then the compromise seems like a reasonable approach."
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