Fueled by generous tax credits and the prospect of energy savings, municipal solar-array projects are up and running in Aquinnah, Chilmark, Edgartown, West Tisbury, and Vineyard Haven. Oak Bluffs will soon join them — the town is now before the Martha’s Vineyard Commission seeking a permit for a four-acre solar energy system.
Even amid the precipitous plunge in fossil fuel prices, with oil prices sitting at a 12-year low, solar projects continue to expand. Clean energy projects attracted a record $328 billion in investments in 2015. That was nearly six times the total in 2004, according to a report by Bloomberg New Energy Finance.
In the first three quarters of 2015, solar accounted for 30 percent of all new electric-generating capacity in the United States, according to the latest available data from the Solar Energy Industries Association (SEIA) shared with The MVTimes. In 2014, a new solar project was installed in the country every 2.5 minutes.
Massachusetts is a leader in the field, with more than 400 solar companies at work in the state employing more than 15,000 people. The 944 megawatts of solar energy currently installed in the Bay State rank Massachusetts sixth in the country in installed solar capacity. And the Island is emerging as a respectable solar player.
Behind the burst of solar projects are solar tax credits, which recently received a multiyear extension. Under legislation signed in late December to keep the government running for the next year, solar power companies are allowed to keep claiming federal tax credits at 30 percent of the price of a solar array. The solar credit extension got the nod in exchange for lifting the four-decade-old ban on American oil exports.
The solar credits, which apply to home solar kits as well as big commercial installations, remain in place through 2019. After that, the credits gradually diminish, declining to 10 percent in 2022, where they will remain.
Alex Klein, senior director of renewable power research at IHS, a premier provider of global research, told The Times the investment tax credit (ITC) is “one of the most significant stimulus policies for the renewable sectors in the past 10 years.”
Indeed, this 30 percent tax credit has spurred 1,600 percent annual growth in the solar industry since its implementation in 2007, and turned solar into an economic engine. Advocates say the credits have triggered job creation, reduced dependency on foreign oil, and lowered utility bills. Mr. Klein said the actual valuable outcome of solar is very much a function of the alternatives it is replacing.
Solar panels have been around for decades. But the recent and rapid decline in solar panel costs, thanks to innovation and tax credits, has driven growth.
Solar panel prices have dropped by more than 80 percent since President Obama took office. The Obama administration’s 2009 stimulus package created a cache of cash subsidies, leading to an explosion of solar energy companies. The industry’s rise has helped it compete as a viable energy source with coal and natural gas.
Still, the ITC remains one of today’s most contentious policies. As municipal solar array projects increase, so do questions about who really reaps the rewards. “We have seen instances across the country where the solar companies benefit more than the residents or homeowners,” David Williams, president of the Taxpayers Protection Alliance, based in Washington, D.C., told The Times.
“The tax credit is structured in such a way that companies still receive the tax credit even when the solar panels are installed on a house or business,” Mr. Williams said. “We have also seen where homeowners end up paying more because the costs of the lease of the panels are greater than the savings on the electricity.”
As solar energy expands at a lightning-quick clip, the long-term economic benefits are still untested. The businesses and methods that have propelled their hurried spread are still new.
Solar energy, although it originates from the sun, is not free. Maintenance, labor, and environmental costs add up. Environmental impacts associated with solar power include land use, habitat loss, water usage, and the use of hazardous materials in manufacturing.
In Edgartown, the town opted to place a solar array on a section of farmland. In contrast, the Tisbury solar array sits atop a capped landfill.
The Massachusetts Natural Heritage and Endangered Species Program must sign off on the Oak Bluffs solar array before land clearing can begin. “We work really hard with solar businesses to eliminate any environmental concerns, and we typically reach an amicable outcome,” state agency representative Brent Powers told The Times.
Energy manager Rob Meyer of South Mountain, a leader in Island solar installations, said the benefits are still difficult to quantify. But he was quick to add that solar energy provides plenty of benefits for everyone: “We have found the solar energy on Island is highly effective in generating energy power during times of high grid stress, like the busy summer tourist season when energy demand is at its peak.”
Karl Rabago, executive director of Pace Energy and Climate Center, echoed that sentiment. “The industry is still immature, the technology is still new, and we don’t know yet if the perks received are effective at leveraging the capital employed,” Mr. Rabago told The Times. “But the benefits are many.”
“People always question if they are getting the biggest bang for the buck,” Mr. Rabago continued. “Understanding the true value of solar is tricky right now, but we are making progress. Several studies over the past 10 years show customers with distributed solar save two times the retail rate of electricity. And unlike other energy sources, which are at the mercy of the weather, the economy, and the price of fuel, solar costs are relatively stable and controlled. That’s a big advantage when planning personal and city budgets.”
As to criticism that people entering the solar market have a self-serving agenda, Mr. Rabago said solar is a business, and this is America, home of capitalism. “Everyone has a different reason for their ventures,” he said. “Yet many are indeed do-gooders who are looking to blend their business savvy with values that matter to them.”
The need to get off fossil fuel, to even the energy trade imbalance, and the desire to arrest pollution and climate change drive most, according to Mr. Rabago. “And despite criticism, I have yet to see any rigorous studies showing that solar businesses and customers are not paying their fair share of their energy grid,” he said.
Still, opponents argue that the solar tax credits simply shift the tax burden from a select group, like the businesses behind them, to those who do not qualify for the tax incentive: most American federal taxpayers.
Critics maintain the time has come for the industry to stand on its own and compete in the free market without any help from taxpayers. Nicholas Loris, an energy analyst with conservative Washington, D.C., think tank the Heritage Foundation, told The Times these generous green handouts need to cease.
“The solar industry, and the businesses behind it, enjoys favoritism in energy markets thanks to these credits,” Mr. Loris said. “To truly compete and show it can survive, it’s time to end these credits.”
Liz Argo, special projects coordinator for the Cape and Islands Vineyard Electric Cooperative (CVEC) said in the battle of who is making money, it is important not to lose sight of solar energy’s myriad benefits. “Municipal solar array projects on Martha’s Vineyard are good for the Island’s communities, environment, and the vendors who install them,” Ms. Argo said. “It’s a win-win-win.”
Mr. Rabago said it will take some time before we actually realize all the merits of solar, and many go beyond dollars. “Societal benefits should be included when assessing the overall costs and benefits of solar, and determining additional incentives,” he said. “We know the cost of everything, but the value of nothing. Solar energy is changing that.”