A pair of bills now before the General Assembly would lift the caps on state personal income tax credits given to Rhode Island residents who install renewable-energy systems in their homes, whether they involve solar power, wind power or geothermal technology.
“Rhode Island needs to make more of a commitment to encouraging use of cleaner, more efficient renewable energy,” Rep. David A. Segal, D-Providence, lead sponsor of the House bill, said in a news release. “We know we can’t rely on oil forever, so we need to do what we can to get people to move toward renewable energy now.”
Currently, homeowners who install renewable-energy systems can get a tax credit of up to 25 percent of the cost of the system they install. But the tax credits are capped at $15,000 for photovoltaic systems, active solar space-heating systems, and wind energy systems, and $7,000 for solar hot water systems and geothermal systems.
Most photovoltaic systems cost $30,000 to $50,000 to install; solar hot water systems cost an average of $10,000; and space-heating systems typically cost at least $15,000 to install, said Bob Chew, owner of Bristol-based SolarWrights, which installs solar-powered systems.
Segal’s bill and a matching bill sponsored by Sen. David E. Bates, R-Barrington, would eliminate the caps so a homeowner would be entitled to a tax credit equal to 25 percent of the cost of installing a renewable energy system, no matter how expensive.
The measures are now before the House and Senate Finance committees.
Removing the caps would stimulate the residential solar-installation industry in Rhode Island, which has virtually disappeared since 2005, when the state eliminated an incentive program that subsidized up to $25,000 of the cost of installing a five-kilowatt photovoltaic system, said Chew, who wrote the state’s original residential renewable-energy tax credit legislation.
Also, when the caps were put into place, there were federal incentives that helped homeowners pay for the installation of solar energy systems. Those federal programs no longer exist.
SolarWrights, which is the only full-time solar energy installation company in the state, did not sell a single photovoltaic system in Rhode Island last year, Chew said.
In particular, Chew said that if it becomes law, Segal’s legislation would stimulate the local market for solar hot water systems.
“I think this is going to open up the market again,” he said. “Not the way it was two years ago – it’s not going to be phone ringing off the hook – but it will provide at least some market for Rhode Island again, if that passes.”
The state cut the solar energy incentive program after the General Assembly passed legislation dictating that the Renewable Energy Fund, from which the subsidies came, must pursue projects that produce substantial amounts of energy and a return on investment, said Andrew Dzykewicz, chief energy adviser to Gov. Donald L. Carcieri.
“New England is facing tremendous, tremendous electric energy shortfalls by 2015 – we need 4,400 megawatts of electricity,” Dzykewicz said. “To put that into perspective, that’s four Seabrook nuclear stations or its nine Manchester Street stations. That’s the shortfall. We’re not going to get it five kilowatts at a time. That’s what was behind the decision to make investments – not giveaways – in larger-scale renewable energy projects.”
If the General Assembly “chooses to change that philosophy this year,” Dzykewicz added, “then I suppose they can do that. If they do it with tax credits, that money has to be made up someplace else. I would hope there’s some way to prioritize, because we are facing a $350 million shortfall.”
