IRS Form 5695 – Residential Energy Credits, Endangered by Congressional Idiots

(Deep breath)

I hope you will pardon me for a few minutes, I’m going to rant, and get something off my chest.

 

First, let’s review the state of the solar hot water incentives in the USA.  The only financial incentive that is available to everyone is the Residential Energy Credits, or IRS form 5695. Various states have their own incentives, some better than others, but anybody can use IRS form 5695 when they do a solar installation with OG rated equipment. Sometimes referred to as the “Renewable Energy Tax Credit”, this incentive makes available a tax credit of 30% of system cost, capped at $2000 for a residential solar hot water installation, uncapped for a commercial installation (so, whatever the cost is, reduce it by 30%).

This is a good incentive! It helps!!! Oh, and it expires this year, on December 31, 2008.  Yep. That’s right, all gone.

 

Keith Johnson, of the Wall Street Journal blog, “Environmental Capital”, states the following:

“The renewable-energy industry’s still out of luck: The U.S. Senate tried and failed again to extend the tax credits that make clean energy competitive. That leaves the crucial government support even closer to expiration at the end of the year, and means lots of renewable-energy projects in pipelines around the country could get cancelled. “

Why has the U.S. Senate been unable to extend the tax credit? 

 

The esteemed Mr. Johnson again:

“Despite calls from people as disparate as Al Gore and T. Boone Pickens for more clean energy, the Senate vote wasn’t even as close as previous efforts to extend the tax credits—51 senators voted in favor, to 43 against. The measure needed 60 votes to be filibuster-proof—crucial at a time when Senate Republicans are holding their support for the tax credits until Democrats offer their support for more domestic oil drilling. If the two sides can find common ground, Congress could still renew the tax breaks after the August recess.”

 

Let’s just be really clear about this.  I think drilling for domestic oil is probably not the worst thing in the world. I think oil workers need jobs, and we should produce our own oil, while ramping down our use.  We can’t just “get off oil” tomorrow – too much of our infrastructure depends on it.  However, it is widely accepted that drilling domestically for oil will not impact gas prices for a long time, due to the logistics of building rigs, getting the oil out of the ground, down the pipeline, to a refinery…you get the picture.  According to Time magazine, “…even if tomorrow we opened up every square mile of the outer continental shelf to offshore rigs, even if we drilled the entire state of Alaska and pulled new refineries out of thin air, the impact on gas prices would be minimal and delayed at best. A 2004 study by the government’s Energy Information Administration (EIA) found that drilling in ANWR would trim the price of gas by 3.5 cents a gallon by 2027.”

 

Admittedly, our energy independence has to include oil in it somewhere, for many years to come – our infrastructure depends on it.

However, the incentive is vital for the US solar industry. Republican or Democrat, most sane and reasonable Americans will agree that a growing renewable energy industry means more local jobs, a stimulated economy and, god forbid, a cleaner environment.

So, for Congress to be at a stalemate over drilling, and to be holding the Residential Energy Tax credit hostage over this really kills me.

I’ll be ranting about this more later, but it’s an indication that we may continue to lag behind the rest of the world in our adoption of solar energy of all kinds for some time yet.

 

Production continues on our video project – stay tuned.

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