March 15, 2013

Rothschild: Ariz.’s solar incentives should be phased out, not whacked, Arizona Republic

By Jonathan Rothschild

Last fall, I held a round-table discussion with more than 50 representatives from Tucson-area solar businesses — from installers to manufacturers and utility-scale solar providers. My goal was to hear, directly from them, what conditions would help grow the solar industry and create jobs in Arizona.

The key issue I heard from this group was a need for consistency from government at all levels.

As competitors in a fast-changing global industry, these business leaders understood that government incentives had helped them grow and that those incentives would be reduced over time. They were aware, of course, that traditional energy providers (coal, oil and natural gas) have enjoyed government subsidies for decades, with little threat to their continuing indefinitely.

Despite this awareness, nobody at the table asked for more subsidies. In fact, local installers asked the city to reinstate permitting fees for solar systems, rather than continue to waive those fees. They told me that a fair, predictable system was better than generous subsidies one day and nothing the next.

That’s not what they got in January when the Arizona Corporation Commission slashed incentives for residential solar installations and did away with commercial incentives completely. Unfortunately, this decision will have long-lasting consequences for Arizona’s solar industry and for our state’s reputation as a good place to do business.

In February, my office reached out to that same group of businesses to learn how the ACC’s decision will affect them. What we heard was not encouraging. One installer has already laid off almost a quarter of its permanent workforce. Its customers include churches and schools — non-profit organizations that generally aren’t able to go solar without “commercial” incentives.

Another business, with employees statewide, expects its solar workforce in Arizona to shrink two-thirds by the end of the year. These were good jobs, which paid well.

Other businesses have orders that will sustain them for several months, but after that, they aren’t sure what they’ll do.

More than one company has told us they plan to move out of Arizona altogether. These are companies that employ engineers, fabricators, and business professionals who are creating the world’s future energy economy.

These are people, and this is an industry that Arizona cannot afford to send packing.

In a guest column in the Arizona Daily Star, ACC Commissioners Bob Stump, Brenda Burns, Gary Pierce and Susan Bitter Smith said, “After years of generous incentives have helped commercial solar get off the ground, the declining costs of solar have brought us to a place where the market can nearly sustain itself without them.”

Yes, solar costs are coming down, and, yes, the market is close to sustaining itself. However, the way to help the market become 100 percent self-sustaining is not to cut incentives 100 percent. Instead, we should have a predictable schedule for reducing incentives, one that businesses can plan on and prepare for. That would be the business-friendly approach.

Right now, Arizona is ranked third nationally for installed solar power. Our state, our cities and towns, our people and businesses have made significant investments in developing this industry, an industry that takes advantage of our state’s greatest natural resource: sunshine. Across the board, that investment has already yielded great returns in good jobs for our citizens.

Now is not the time to pull the rug out from under an Arizona industry that is almost ready to stand on its own.

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