By Jason Stverak – There’s a rising player in the Hawai’i energy market, promising inexpensive, green solar energy for homes and businesses, but there’s far more to SolarCity than meets the eye. The California-based solar panel provider, which has been in Oahu for three years and expanded to the Big Island this month, collects for itself tax subsidies intended for its consumers, who are left vulnerable to sudden spikes in their electricity bills.
SolarCity is one of many solar firms that relies almost entirely on government handouts and credits to generate profit–exploiting loopholes to pocket federal tax breaks intended for homeowners who install solar panels. Though not technically illegal, companies that employ business models of this nature engage in the worst type of cronyism, simultaneously pocketing taxpayer money while leaving their customers with needlessly high energy bills.
The Solar Investment Tax Credit (ITC), a longstanding federal program that was expanded in 2008, allows homeowners who install solar panels to write off 30 percent of the costs, in an effort to encourage Americans to go green. While far from the best use of our tax dollars, this program is at least defensible as one of many writeoffs used to promote certain behaviors–presuming that the tax credit actually goes to the homeowner, who pays for and gets electricity from the panels.
Most solar panel customers purchase a panel and receive the tax credit without fanfare, but SolarCity offers 20-year leases on its panels instead of selling them. Because the company retains ownership of the panels even after they are fixed on customers’ roofs, it can take advantage of a loophole in the ITC and deny the customer of his tax credit. SolarCity pockets the 30 percent tax break every time it installs a panel, and has milked the federal government out of $411 million–on top of more than $10 million in funds from the stimulus, and untold state-level subsidies.
This loophole has paid off for SolarCity, but its customers have gotten the raw end of the deal. Deprived of the tax credit available to customers of most other solar companies, these clients are also locked into 20-year leases, regardless of how well their solar panels work. And as is so often the case with “clean” energy, the panels don’t always work as intended–some California customers have seen a nearly 50 percent spike in their utility bills, contrary to SolarCity’s promises of major savings.
Yet however frustrated customers may be, paying higher rates for inefficient energy and not seeing a nickel in tax breaks, there’s nothing they can do about it until their 20-year lease expires. And SolarCity has no reason to alter what is a very lucrative status quo–collecting hundreds of millions from the federal government is hardly new to SolarCity’s leadership. The company’s founder, Elon Musk, is also CEO of Tesla Motors, an electric car company that has been almost entirely dependent on government loans, handouts, and tax breaks. Tesla used a $465 million federal loan–considerably more than it raised from private investors or from its IPO–to get off the ground. It also took a $10 million grant from the state of California and relies on tax credits to sell its cars and occasionally turn meager profits.
Now, SolarCity is setting its sights on Hawai’i’s generous solar tax credits and incentives, hoping to pick off customers on Oahu and the Big Island through the same questionable promises of lower electricity bills that have lured many California customers into financially devastating leases. Hawai’i residents are already involuntarily lining the pockets of solar firms through their tax dollars, and should do their homework before putting a panel on their roof.
Jason Stverak is President of the Franklin Center for Government and Public Integrity.
Wow! Handouts???
This is really a poorly written and researched article…
Wow! Handouts???
Okay first of all, Solarcity does not make people pay more for their power through a PPA, you pay for production at a cheaper rate then your current power. You start saving money from the get-go. Second, the power is guaranteed and Solarcity reimburses any power that isn't produced. There are over 100,000 installations and they have an A+ with the Better Business Bureau and named the top 10 clean tech companies. This article is extremely biased, and I suggest you research this company a little more before bashing the company that just provides cleaner energy.
Yeah this article is incredibly biased and the author knows it. There isn't a single fact or even a number in the article. The author relies on extremely vague statements like "some California customers have seen a nearly 50 percent spike in their utility bills". This statement isn't only misleading but without context it is entirely false.
Consider the source:
"The Franklin Center was founded in 2009 with an initial sponsorship grant from the Sam Adams Alliance. According to the organization website "The Franklin Center is supported by contributions from generous individuals, foundations and business entities in support of our mission," the organization does not disclose their donors.[6] An article published by the Columbia Journalism Review, in 2011, revealed that 95 percent of the Franklin Center’s revenues came from the liberty advocacy group DonorsTrust,[7] whose top contributors were Libertarian philanthropists Charles and David Koch."
https://en.wikipedia.org/wiki/Franklin_Center_for_…
While reading this I got the impression this guy was a Koch brother puppet, thanks for the info.
the Koch brothers are not libertarians.they are hard core conservatives.
What a terrible article.
This article is a JOKE!!!! Bottom line is you go solar at zero upfront cost and lock in a low monthly payments that is fixed for twenty years. SolarCity will maintaing and insure the system parts and labor included. Most homeowners don't have the upfront cash to buy a system and some homewoners can not benefit from the 30% tax credit because they do not have the tax liabilty. Its a credit not a REBATE. SIr you should not ever write anything ever since you have no clue about what you are writting about. Please get lost
The Hawaii Reporter loses all credibility by posting this tripe as if it was a real article.
What didn't this biased clown of a "reporter" mention that all federal loans were paid back far faster than projected, especially with Tesla. Tesla is expanding their Fremont factory, they have also built a factory in Europe and they are building one in China. They are also planning to build a massive giga factory. That doesn't sound like meger profits to me. I didn't see this "reporter" mention the subsidies oil companies get once, and they have much higher profit margins. As for SolarCity, one reason they get so much goverment money is because the government hires them to install solar on their building. Their biggest single customer is the US military that has contracted to put solar on military housing across the country. The US government never gave Tesla or SolarCity and hand out, the government gave them a loan which was paid back in full with interest. Now the government is giving SolarCIty money as a costomer for services rendered. Is this "reporter" a Koch brother mouth piece or is he actually this dumb?
Wow, this article is disgustingly biased. Also, when will people start understanding that subsidies to support solar (which produces a positive externality) is a wise policy decision.
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