Louisiana State University Agricultural Center

LSU-Ag-Center

Early in 2015, Louisiana State University Agricultural Center (AgCenter) released a booklet titled, “Solar Power for Your Home: A Consumer’s Guide.” EEI, the trade association for investor-owned utility companies in the U.S., paid LSU $49,701 to produce the report.

Authored by professor Claudette Hanks Reichel, the LSU report advises potential solar homeowners to first focus on energy efficiency rather than install solar panels. The report concludes, “the bottom line… energy efficiency and conservation trumps all and should be your first priority in green living and lowering home energy costs.” However, the report fails to provide important context that counters the conclusion.

First, the largest solar leasing company and installer in the state, PosiGen, does home energy efficiency upgrades simultaneously when installing a residential solar’s system. PosiGen is now the largest energy efficiency provider in the state, but was not chosen to review the report. Instead, EEI and LSU requested that Mike Murphy from Solar Alternatives to act as a reviewer from the state solar industry. Solar Alternatives does not lease solar systems; therefore, their customers consist solely of those who can pay for the solar system upfront. For context, more than 70% of solar installed for homeowners are leased in the U.S., not purchased.

Second, the investment tax credit (ITC), the federal incentive for homeowners to install rooftop solar and power companies to construct utility-scale solar facilities, was set to expire at the end of 2016. If the tax credit had not been extended, the credit would have dropped from 30% to 10% for commercial solar system installations and would be eliminated entirely for residential systems. However, Congress passed a spending package on December 18, 2015 that extended the ITC for another three years. It will then decrease through 2021, ultimately providing a 10% permanent deduction in 2022.

Analysts across the country write that it continues to be an ideal time to install solar panels in order to receive the federal tax credit. In 2014 and through the first half of 2015, the U.S. installed 8,949 megawatts of photovoltaic solar energy, which is almost more than the capacity installed in the country from 2010 through 2013 combined. Louisiana is an emerging market for solar installations. Companies installed a record-breaking 31 megawatts of solar in 2014.

Third, the LSU report was drafted as the utility industry lobbied Louisiana politicians to end the state’s solar tax credits. The Louisiana state legislature voted in 2013 to sunset the state’s 50% tax credit (max of $12,500 credit per install) in 2017 for purchased and leased solar panels, as well as implemented a step-down of the credit for leased systems. The step-down of the credit for leased systems is:

  • $9,500 credit limit for systems installed between January 1, 2014 and June 30, 2014
  • $7,980 credit limit between July 1, 2014 and June 30, 2015 and $4,560 between July 1, 2015 and December 31, 2017

State officials, including Governor Bobby Jindal, targeted the credit again last year.  Ultimately, in June, the state reduced the maximum credit for purchased solar systems to $10,000 per install. The enacted state budget also limits the amount spent by the state for both purchased and leased systems to $25 million ($10 million in FY2015-2016, $10 million in FY2016-2017, and $5 million in the first half of FY2017-2018). The tax credits for solar are dwarfed by taxpayer giveaways to the oil and gas industry. Louisiana taxpayers have provided over $1.2 billion to the oil and gas industry to subsidize fracking operations since 2010.

Aware of the surge in solar installations and expiring tax credits, a utility industry-funded report telling homeowners to wait before installing a solar system while the industry lobbied to weaken tax credits for homeowners appears unethical, especially when disguising the report as an academic exercise. Concerns about the report’s conclusions were raised in comments LSU received.

Documents obtained by EPI, from LSU via a public records request show that reviewers with the initials “KS” and “SA” raised points that pushed back against the report’s thesis in edited versions sent back to the author.

KS commented:

I’m not so sure I’m comfortable with definitively saying [“Even with financial incentives, a rooftop solar system is not the first step to saying energy, money, and the environment] “is not.” Beyond the low hanging fruit of free conservation behavior changes and basic air barrier (i.e. weatherization) and thermal barrier (e.g. attic insulation) remediation, I would argue that solar PV is now a better investment than most other efficiency measures. New doors, windows, roof, and even HVAC are all very expensive upgrades with somewhat slow and small returns on the investment. These items should often only be upgraded to more efficient products when the existing products have failed or have passed their useful lifespan. [Emphasis added]

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Similarly, SA commented:

I generally agree with efficiency first. However, for situations where solar would take a 50% or lower bite out of the household usage, it may be prudent to take advantage of the solar tax credits before doing efficiency. The reality is that state-level politics have made the solar tax credits a political punching bag. Therefore, each time the state legislature is in session (in LA every fiscal session), the homeowner could lose the opportunity for a major return on investment. For instance, in LA we’ve had several tweaks to the tax credit that have either reduced the opportunity for large PV systems and in the case of duplexes, a large number of homeowners who were sitting on the sidelines may have lost the opportunity to qualify for the credit due to a strictly political reason. If the homeowner takes the solar tax credits, reduced usage by less than 50%, there is no significant danger of lost investment in their pursuit of efficiency improvements subsequent to installing solar. For the majority of households, energy efficiency is a journey, not a destination. [Emphasis added]

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Lastly, while the acknowledgements page does list the contribution from EEI, the public records reveal more about the production of the report:

  • Multiple drafts were sent back and forth between LSU and EEI. EEI edited drafts of the report and sent them back to LSU(from September through December). And, emails show that there was a discussion of whether or not to list EEI staffers Brian McCormack and Ed Comer in the report as editors/reviewers. In the end, the EEI reviewers were listed in the report.

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  • EEI paid for Claudette, the author of the paper, to present her findings at the National Association of Regulatory Utility Commissioners’ (NARUC) conference and the National Association of Utility Consumer Advocates’ (NASUCA) conferences in November 2014 and again in February 2015. EEI also arranged for her to present to NARUC and the American Public Power Association in Washington D.C.
  • Ed Comer sent notes from Brian McCormack to LSU; McCormack worked with the American Legislative Exchange Council in 2013 on creating a model bill attacking distributed solar energy.
  • Sheri Givens emailed the author with resources and solar complaints filed through the Better Business Bureau and Yelp that were used in a draft report that Givens herself authored. Givens is president of her own consulting firm and senior vice president of another firm, Gee Strategies, that is mentioned in EEI’s action plan to help utility EEI_education_of_regulatorscompanies educate regulators. Givens previously served on the Electric Reliability Council of Texas and was then elected to the Executive Committee of the National Association of State Utility Consumer Advocates. She was also a member of the New Mexico State University’s Center for Public Utility Advisory Council. Givens has also recently worked alongside EEI in pushing back against distributed solar energy. She presented at the American Legislative Exchange Council’s Energy, Environment and Agriculture Task Force in July 2015, and presented at a meeting between the Congressional Black Caucus and EEI alongside David Owens, EEI’s executive vice president of business operations and regulatory affairs.