Retaining Tax Breaks For Installing Renewable Energy Systems

It's funny that such a good program should draw such debate, not simply on Hubpages, but around the web and indeed all the way up to Capital Hill. Everyone seems to have their own opinion as to whether or not to retain the tax breaks given for the installation of renewable energy systems. To briefly explain for any who may not be familiar, there are many tax advantages to installing or retrofitting your home and or place of business with some kind of renewable energy system. Most commonly this refers to solar power or wind turbines. On the Federal level there is an across the board 30% tax credit off of the cost of your system, which applies to residential and commercial entities alike. A good number of States also have credits that can be added on top. Effectively these tax breaks can drastically reduce the cost of installing renewable energy systems.

While the technologies themselves may be well known and relatively mature (we've been using the sun and the wind to power and heat our homes and businesses for thousands of years), the renewable energy industry is still basically in it's infancy. We all may be tempted to re-think any perceived "business subsidies" considering the current fiscal crisis in the United States and across the globe, however, the current tax breaks serve a very real and necessary function. One of the biggest barriers to entry for those thinking of installing solar and or wind power, is the cost. There is no doubt that solar and wind technologies pay for themselves over the long run - but they are still not quite competitive with power from the utility (renewable energy has not yet reached Grid Parity in the US - Hawaii as the exception to that rule).

The tax breaks on renewable energy systems increases demand which stimulates innovation and cost competitiveness and ultimately will provide the economies of scale to keep costs down. Case in point, I recently took a tour of a solar manufacturing facility that cost $90 million to build, yet only one of the three production lines was running - there wasn't enough demand yet for the other two lines to be in production - the result? Current customers were paying the higher end cost to maintain a facility that could be producing more product - capitalized cost of machinery, rent, facilities build out, managerial and executive staff et cetera. This is a classic business catch-22, the company knows they can produce more at lower prices, but will not invest the money to do so without the orders to cover the initial cost. More consumers will buy when the cost comes down. While we would all probably like government to have the least possible influence upon our personal lives and business, some government intervention can be good - tax breaks provide the "cue" that will drive the consumer to consider making their purchase, the more orders that the facility gets the more likely they are to invest their money in completing the build out of their final production lines.

There can be little question as to the efficacy of tax breaks to stimulate demand. Those who are opposed to it tend to provide as their argument that we need to address our bigger budgetary needs first. In response to that argument, the loss of revenue Federal and State governments from any renewable energy tax breaks is so relatively minor to be almost negligible, however, the benefit to the clean tech industry at large and to the public is huge - more job creation, more investment, cleaner energy at lower prices. The benefits far outweigh any negatives.