New tax credits turn some
green homeowners blue
Tucson Citizen
October 27, 2008
http://www.tucsoncitizen.com/daily/local/100819.php
PHOENIX - Congress passed new and extended tax credits with the financial bailout package that are expected to prompt thousands of people to add solar- and wind-energy systems to their homes.
But the incentives for some systems are so much better than existing tax credits that many people also are delaying their home improvements until next year when the new credits kick in.
The new incentives will slash an additional $7,000 or more off the cost of a solar-energy system compared with today's credits, and $4,000 more off household wind turbines.
Congress haggled all year over the 30 percent tax credit for solar projects, capped at $2,000 for homeowners, that was set to expire Dec. 31.
That prompted many people to rush and purchase solar-energy systems before the credit expired.
Those people, like retiree Dru Bacon of Goodyear, can't help but feel slighted because the $2,000 federal tax credits they received are much smaller than what people will get next year.
Systems installed from 2009 to 2016, or simply not turned on until then, will get a true 30 percent credit applied to the bottom line of their taxes
Bacon had a system installed this year that retailed for $38,000. He got incentives from the state and Arizona Public Service Co. worth more than $18,000, and the maximum federal tax credit of $2,000.
But if he had waited until 2009, he would have gotten a federal credit worth $11,400.
That would have cut his out-of-pocket expense from $18,000 to $8,600.
Bacon still supports solar, but regrets that 48 people in his neighborhood association are installing solar-energy systems. Some already turned on their systems and are not able to get the bigger rebate.
"People I influenced to do it in '08 are probably a little discouraged in me," he said. "But the credit could have gone away, and it looked like it was going to. I think what spurred it was the financial disaster we are all living through."
Solar installer PerfectPower Inc. in Scottsdale has already heard from customers with pending projects who want to push them into next year to get bigger federal rebates, sales engineer Matt Kelly said.
"We've notified our customers, and given them that option," he said. "There were some folks where it was already in place, and everybody opted to wait to have their system turned on."
The credits didn't change for all technologies. Solar water heaters, which are much more affordable but use a different technology, still have a $2,000 cap.
The cap is more than enough to cover 30 percent of most projects, according to Sun Systems Inc., which sells solar water heaters made by its sister company, Integrated Solar in Phoenix.
The average system sells for less than $6,500, President Tom Bohner said.
"On one hand, I'm kind of glad the cap did not get raised," he said. "The current cap allows me to sell a water heater in the mid-$6,000 range and get the full credit. If they raised the cap, I guarantee some fly-by-nights would be in here selling $9,000 and $10,000 systems."
Bohner's 40 employees expect steady business and are thankful the credit was extended at all, even if their solar-thermal technology didn't get the same bonus that photovoltaic equipment was given.
Without the extension, the company's systems essentially would have cost homeowners $2,000 more after the first of the year.
"What is finally happening, is all the rich people that said they would do solar have done it," he said. "Now it is trying to get down to the masses. The masses will be a much tougher sell. But the world is figuring it out. The sunshine that falls on your roof is more than enough to power your home and heat your water."
Small wind turbines now qualify for as much as $4,000 under a similar tax credit, which likely will help companies such as Southwest Windpower Inc. in Flagstaff reach more customers.
"This is a first for wind projects under 100 kilowatts," marketing manager Miriam Robbins said. "Suddenly, wind is becoming more mainstream just like solar because there are a lot more systems available to the average consumer."
The company has seen sales double in each of the past two years and welcomes the new incentive, she said.
"This just helps sweeten the pot and helps the consumer that maybe was on the fence (about buying a wind turbine) go over it more quickly," Robbins said.
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