Incentive Cuts Crippling Green Energy Economy

In its recent poll, Tennessee-based Shelton Group notes that incentives and rebates were likely the motivating force behind the remarkable rate of energy efficiency improvements that took place from 2009 through the end of last year.

This, in spite of the fact that the nation was (and remains) in the grip of one of the worst recessions since the 1930s – a recession which still persists in unemployment figures. And it is this persistence which is likely to dampen enthusiasm for Obama’s promised “green” energy economy, unless the government reinstates federal incentives which have already expired, or are destined to expire this year if not renewed.

This most recent poll, released on Feb. 7, indicates that almost a quarter of Americans installing home energy efficiency upgrades did so as a result of a rebate or incentive, and that one quarter of those would not have done so without the incentive. In fact, 7 percent admitted that the financial encouragement they received actually impelled them to choose a higher-efficiency model or upgrade.

All that is apparently over, as new tax law reduces incentives on most improvements to 10 percent of costs (from a former 30 percent), and reduces the maximum amount of credit that can be claimed from $1,500 to $500.

Fortunately, former credits for residential solar and wind energy systems (30 percent) remain, applicable to both solar hot water systems and solar photovoltaic (PV) power systems, as well as small (residential-grade) wind energy systems. Even residential fuel cell systems, as rare as hen’s teeth even in the burgeoning clean energy economy, qualify.

Which means that, while one section of that green energy economy continues to thrive (in spite of the dampening effects delivered by Xcel Energy Inc.’s rebate cutback, for example), the efficiency portion of that economy is likely to fall by the wayside.

Photo Credit: Oregon DOT via Flickr CC

Posted on March 7th in Solar Funding by Jeanne.