Analyzing the Importance of Historic Energy Sector Incentives to Commercializing Emerging Technologies
In the fall of 2012, the GW Solar Institute issued a report on the long tradition of government support for energy technologies in the United States. The report, co-authored with the help of Bryan Crabb, Executive Director of the California Solar Energy Industries Association, analyzes the many forms of assistance received by coal, oil, nuclear and other energy technologies, as well as the ways in which those support mechanisms have been made permanent parts of the US tax code. The report found that from 1950 to 2010, not only have taxpayers heavily subsidized certain energy sources, but there is also a strong correlation between the current energy mix and the beneficiary technologies. The report includes key figures from other research efforts to quantify the financial assistance provided by these incentives and compares them with solar energy incentive figures. As part of the report’s release, the Institute produced a sophisticated infographic that was shared across social media networks and in other venues.
Modernizing the Investment Tax Credit
In the fall of 2012, GW Law student Joel Meister worked with the Institute to explore how the Investment Tax Credit (ITC) could be modernized. Solar energy projects that use tax equity from the ITC are subject to recapture rules formulated decades ago. The risk of recapture impedes financing solar projects with mixed pools of equity that contain tax equity from the ITC, delaying projects and increasing costs. The recapture rules for the ITC have not changed significantly even as the credit itself has evolved fundamentally over the past five decades. Meister recommended that the ITC's recapture rules be revised and modernized and could potentially adopt the precedents of recapture rules for 1603 grants or the Low-Income Housing Tax Credit.
Mapping Policy Options to Expand Investment and Deployment of US Solar Power
From 2008 to 2011, GW Professors Joseph Cordes and Peter Linquiti of GW’s Trachtenberg School of Public Policy and Public Administration worked to complete a comprehensive solar policy framework. Funded by the GW Solar Institute, this research summarized the case for public intervention to promote the use of solar power; develops a typology of different legal, regulatory, and fiscal options available for encouraging wider and more rapid use of solar energy technologies; and evaluated illustrative policies that were benchmarked against accepted criteria of policy effectiveness. The researchers concluded their ambitious work with a discussion of the comparative economic, financial, and political advantages and disadvantages of different federal fiscal subsidies for solar energy. These findings were presented at several academic conferences, including the annual conference of the Association for Budgeting and Financial Management.
Advancing Solar Real Estate Investment Trusts
Starting in 2008, the GW Solar Institute helped pioneer consideration of unique financing vehicles to provide new capital for solar energy development and to provide a return that non-institutional investors could realize. In the spring of 2010, a GW Law student, Joshua Sturtevant, conducted important research on solar energy issues as part of a course on Environmental Issues in Energy Law taught by the Institute’s Co-Director. With guidance from the GW Solar Institute, Sturtevant, conducted extensive research to advance the concept of Solar Real Estate Investment Trusts (Solar REITs). Just as real estate investment trusts (REITs) have spurred investment into commercial real estate, he argued that Solar REITs could bring solar development to the masses and would increase capital flows into solar energy markets. The student’s research revealed that the existing tax code must be clarified by the Internal Revenue Service in order for income from solar to qualify under the terms of the Internal Revenue Code. Alternatively, Congress could enact legislation amending the Internal Revenue Code to achieve this objective. This research led to many more Institute blog posts on the subject and various public and private dialogues.
Assessing the Design, Impact, and Adoption of State Solar Financial Incentives
Between 2008 and 2011, researchers from the GW Institute of Public Policy completed important research related to the design of state financial incentives for solar energy. This research project, conducted by Professors Andrea Sarzynski and Garry Young, sought to fill major information gaps about the level of state expenditures on solar energy related incentive programs, the program results, and the nature of the design or implementation features that worked best to promote the use of solar energy technology.
This project addressed the information gaps through three research phases. The first phase catalogued and assessed the design and variation of state-level incentives for solar power (as of December 2009). The second phase compiled evidence regarding the impact of incentive programs in ten states on consumer adoption of solar technology, reduction in energy demand, and reduction in the environmental impact of energy production. The third phase of the project evaluated the factors that influenced the adoption of state solar financial incentives within states. Several high-level findings emerged from this project that were shared in a paper published by the journal Energy Policy and at the annual conference of the Association of Public Policy Analysis and Management. Among those findings, the researchers the researchers noted that solar incentives have had minimal impact when implemented without a supportive network of complimentary policies.