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Citing spiraling costs Abercrombie slashes PV credits

By Andrew Pereira
Published On: Nov 09 2012 07:06:00 PM HST

Tax credits received for solar installations will soon be slashed.

HONOLULU -

New rules that critics say will cut the photovoltaic income tax credit in half were announced Friday by the Department of Taxation. 

Gov. Neil Abercrombie said the new rules will discourage abuse of the system, and allow the state to better manage its finances.

"You're going to get the credits, the question is whether some people are getting more than they're entitled to," Abercrombie told reporters. "It undermines our ability to have a balanced budget, and to be able to invest in other public purposes."

Currently, homeowners and businesses can qualify for multiple tax credits by installing more than one PV system. But as of Jan. 1, the state will cap the credit for the typical single-family home to $5,000 per calendar year, effectively cutting the current 35 percent credit in half.

Environmental groups and renewable energy advocates blasted Abercrombie for essentially making PV systems more expensive.  They say the move will also make it more difficult for the state to reach its goal of producing 70 percent clean energy by the year 2030.

"We fear what the governor has proposed here is really going to make it more difficult for people to get out from under high energy bills," said Jeff Mikulina, executive director of Blue Planet, a nonprofit dedicated to ending reliance on fossil fuels.    

"This Legislature has been very clear," added EarthJustice attorney David Henkin.  "Hawaii needs to turn to a clean energy future, and the way to do that is by making a generous credit."

However, the rule change does have support from at least one key lawmaker. House Finance Chairman Rep. Marcus Oshiro told KITV4 the PV tax credits are spiraling out of control.

"It was always the Legislature's intention to support renewable energy and getting us away from fossil fuel," said Oshiro, "but not at the expense of having more duplicate systems in people's homes."

In 2010, the state's renewable energy tax credits totaled $34.4 million. But in 2012, that amount grew five-fold to $173.8 million.  In September, the Council on Revenues lowered its general fund forecast for fiscal years 2012 and 2013 specifically because of the escalating costs.  COR forecast renewable energy credits would grow by an additional $90 million in fiscal year 2013, and $150 million in fiscal year 2014.

Andrew Yani of Bonterra Renewable Energy and Solar Power said the state's return on investment is worth the cost of PV tax credits.  He said for every dollar spent on tax credits, the state receives five dollars in return.

 "So, it doesn't make sense whatsoever to pull back on a program that's working," said Yani.

Once new rules take effect, Yani believes homeowners will be forced to install smaller PV systems through a period of several years to meet their energy needs.

"This actually complicates things tremendously for both the individual taxpayer and the (tax) department itself," he said.

Meanwhile, supporters of PV tax credits are predicting dire consequences for Hawaii's booming solar industry, which according to the state accounts for 20 percent of construction permits.

"You're going to be throwing out of work a lot of people who are getting work, and not only good work, but clean energy work," said Henkin.  "It's just disastrous policy."

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