Some Worry Financial Perks Will Dry Up
By James Hohmann
Washington Post Staff Writer
Thursday, August 14, 2008
In the house that Tim Dowd is building in Howard County, he wants to keep the monthly electricity bill as low as possible. He has done everything he can think of, installing thicker walls with more insulation and buying higher-grade windows.
Early in the process, he studied wind and solar power and geothermal heating. The solar system he settled on cost $35,000.
"There's no doubt about it: It takes a lot of green to be green," said Dowd, 31, of Woodbine, a D.C. firefighter.
Luckily for him, subsidies are making solar energy more affordable. He said he'll get a $5,000 tax credit from Howard, $2,000 off his federal taxes and a $10,000 grant from Maryland. That will bring the cost of the system to $18,000.
Dowd is among the increasing number of Maryland homeowners taking advantage of government incentives to install solar power. Participation isn't widespread, but with rising utility prices and more awareness about climate change, solar technology is becoming more palatable.
Environmentalists and solar business owners say that they are worried the state will run out of grant money this year and that they are concerned about a federal tax credit -- of up to $2,000 -- that expires at the end of the year. Congress has not renewed it.
Montgomery County rolled out tax breaks for environmentally friendly design initiatives, including solar power, at the beginning of July. Three weeks later, the Prince George's County Council approved a measure that allows homeowners to claim a credit of up to $5,000 on their property taxes for installing certain solar or geothermal energy devices. Those jurisdictions followed Howard, Anne Arundel and Harford counties, which had started offering similar incentives in recent years.
County-level incentives to use solar technology, which is relatively expensive compared with traditional methods, initially drew a lukewarm response in Maryland, officials said. But in the past year, more homeowners have shown interest.
A grant program administered by the Maryland Energy Administration disbursed its allotted $590,000 for the year on the first day applications were reviewed, said Brandon Farris, the agency's policy director. About 95 people received grants, he said, and more than 60 were put on a waiting list.
About 330 projects have benefited from the grants since the program began in 2005, Farris said. Those who qualify in the first-come, first-served process can receive up to $10,000.
But some who counted on the state money found it gone.
Del. Jon S. Cardin (D-Baltimore County) has pushed hard for solar energy rebates and tax credits in the General Assembly, but he said the budget for grants got slashed during the last legislative session as the legislators confronted a deep deficit.
Cardin said he applied for a state grant this year for solar panels at his house but doesn't think he'll make the cut. His name does not appear on the waiting list.
In Maryland, effective this year, there is no state sales tax on solar equipment, and property with such an installation cannot be assessed at a higher value.
Prince George's County Council member Eric Olson (D-College Park) said he supported the local measure because he's worried about the possibility of rolling blackouts if people remain dependent on conventional power.
"The more renewable energy that we're using, the better off we're all going to be," he said.
Alex Hirtle, a member of the executive committee of the Prince George's Sierra Club, said the county subsidies could reduce the amount of time it takes to pay off a system from 16 to 18 years to about 12.
But there are some downsides to solar power. Output drops off at night and on cloudy days. And some users have complained about trouble with power companies and hassles in getting approval from homeowners associations worried about the shiny panels.
Sometimes it takes awhile to get the word out about solar incentives.
Only one person applied for Anne Arundel County's tax credit last year. But eight have applied this year for what William Brown, the county's controller, calls a "good deal."
Linda Watts, chief of Howard's bureau of revenue, said 10 credits were given out in the first year of the county's program. In the second year, the most recent fiscal year, 44 people received credits worth a combined $161,000. Seven have been approved to take the exemption for next year.
Since Montgomery's program went into effect in July, about a dozen residents have applied for the tax break. Rob Hagedoorn, chief of the county's treasury division, said requests will be granted as inspectors certify installations.
Deborah Parrish, an office manager whose Gaithersburg home was outfitted with solar panels July 1, said she rushed to submit her application online.
"We're the first in the neighborhood to have solar," she said, anticipating that others will follow. "I know that the incentives are what's going to make it possible."
Besides the limited state money, there are caps on how much each county will allow individuals to claim exemptions for. So far, there haven't been enough applications to cause a problem.
But not everyone thinks the subsidies are the best use of taxpayer dollars.
"Throwing more subsidies at [solar power] will mainly serve to increase revenues for producers because they can charge a higher price," said Benjamin F. Hobbs, a professor of environmental management at Johns Hopkins University.
Jeff Dorety, director of sales for Chesapeake Solar in Jessup, said homeowners in Maryland have more to gain than those in the District and Virginia. But he said the weak economy could dry up revenue and prompt governments to slash subsidies.
Kenneth Orski, who said he's "nearing 70," spent $38,000 for solar panels on his Potomac home about two months ago. He said that he had vaguely known about the incentives but that he didn't realize how much he could get back until a salesman told him.
Orski said the $9,200 he could apply for from the state was "the trigger" that pushed him to buy the panels. A meter in his garage allows him to track how much energy they are producing, and he said he also enjoys watching his utility bills drop.
"That's sort of a psychological reward that we obtain from having installed the solar panels," he said.
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