Sun burn: Solar tax credits scorch state budgets

Solar power can burn a hole in a state’s budget, but a well-designed plan can bring benefits. Demand for residential or rooftop solar power, spurred in part by state incentives, is growing rapidly. But if incentives are not well-designed, they can overwhelm a state’s budget. Regulators and utility officials in several states have been surprised – not always in a positive way – by the effects of their solar power policies. Louisiana is one of the more recent, and more dramatic, examples. In mid-July, Louisiana’s Department of Revenue said it was almost $30 million short of funds to pay already submitted claims for rooftop solar systems and that there were no funds to pay future claims, even though the program is not scheduled to end until Dec. 31, 2017. A 2015 law capped the state’s solar tax credit program at $10 million each for 2015-16 and 2016-17 and at $5 million for 2017-18. The state already has $9.3 million in approved credits and $29.6 million in estimated pending claims for 2015-16.