The Washington Post

District boutique’s new solar panels shed light on the value of renewable energy tax credits

Debbie Danielson, owner of Forecast, recently installed solar panels on the store’s roof that will generate about 70 percent of its power. (Evy Mages/FOR THE WASHINGTON POST)

This time of year, Debbie Danielson’s boutique is bursting with color, with bright blue skirts, pale yellow blouses and an array of sundresses hanging neatly throughout the store.

These past few months, though, she has been rather preoccupied with one color in particular — green.

Danielson and her husband, who have long been committed to sustainability and “green” energy, just finished installing more than two dozen solar panels on the roof of Forecast, her 35-year-old women’s clothing and home goods store near Capitol Hill.

In total, the project cost about $44,000, but the couple expects to offset that expense in lower energy costs and tax incentives.

“A few years ago, the payback period would have been a lot longer,” Debbie’s husband, Dana, said in an interview. “Now, it will only take us about four years, and most business people would be excited about an investment that pays itself off that quickly.”

The new solar system will supply about 70 percent of the energy needed to run the boutique, trimming the power bill by an estimated $5,000 a year. The remaining savings will come from federal and local tax credits, which will reduce the company’s tax bill this year by roughly $13,000 and $10,000, respectively.

“There are the environmental benefits, of course, but I’m really looking forward to four or five years down the line, when we have a little more money in our pockets,” Debbie Danielson said.

Meanwhile, the up-front solar costs have come down about 50 percent in the past four years, because of cheaper technology and a flood of new products from China, according to Geoff Mirkin, owner of Elkridge-based Solar Energy World. When he first started in 2009, Mirkin’s solar business was solely residential; now, more than a third of his clients are business owners, and the numbers continue to rise.

“Commercial is actually a better investment, because a solar system on a commercial building is a depreciable asset,” he added. “In addition, you have economy of scale benefits. Most businesses are ordering more material, so the equipment and labor costs come down and you get a better return on the investment.”

A lot of Mirkin’s new business has come from the District, which has “some of the richest subsidies for solar in the country,” he said. The local tax breaks generally cover about 10 to 12 percent of the purchase and installation costs.

At the federal level, the government provides a one-time tax credit worth 30 percent of the cost of purchasing and installing a solar energy system. Initially authorized for two years in 2005, the Business Energy Investment Tax Credit, as it is called, also applies to small wind and fuel power cells.

The incentives were renewed through the end of 2016 as part of the bank bailout legislation in October 2008, and President Obama called on legislators to make the subsidies permanent in the budget proposal he released in April.

However, critics point out that federal energy subsidies will top more than $16 billion this year, according to the Congressional Budget Office, up from $5 billion. Many question whether the federal government can afford such a large investment when Washington is curbing spending on so many other programs.

Rhone Resch, president of the Solar Energy Industries Association, says that making the tax provisions permanent would simply bring them on par with other energy sectors.

“The oil and gas industry has had permanent tax credits since 1916, the coal industry since the ’30s, nuclear since the ’50s, and it’s only solar and wind where you have these temporary measures that expire every few years,” Resch said in an interview.

The tax breaks have broad public support, too, as more than seven in 10 Americans said they believe the government should provide rebates to people who purchase energy efficient vehicles and solar panels, according to a poll released last week by researchers at George Mason University.

The Danielsons count themselves among that majority, noting that they have long taken small steps to protect the environment. The store’s cashiers always ask whether customers need a bag; and if so, it will not come filled with the tissue paper you would likely find at other luxury boutiques.

“It’s a little inconsistent for a high-end store, but it’s not at all inconsistent with our values,” Debbie Danielson said.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.



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