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Small Government Spells Big Trouble for Renewables

Jun 28, 2011

While national and state governments are giving renewable power their blessing, the industry's growth is being trampled by greedy local governments seeking to make a killing at the industry's expense.

Last week REW reported how fees for inspecting solar installations vary widely across southern California. Turns out inspecting and permitting isn't the only problem there. Now the tax man also cometh.

A conservative Republican from Riverside County, John Benoit, is threatening to scuttle big projects there that need to be permitted by September with a last-minute demand for a 2% “franchise fee” covering the life of the project.

The viability of projects to be run by First Solar and Chevron are now being threatened by the fee, and there is no reason to believe local governments won't go after projects already in the ground.

So far the fees and inspection problems cover solar installations, which are relatively innocuous. The growth of residential wind energy could easily turn this trend into a storm.

The fees themselves are less of a problem than their variability and lack of transparency. If consumers and businesses aren't certain of their costs going into a project they may not sign on the dotted line.

Industry groups like the California Solar Energy Industry Association have, so far, been too focused on state government action to do anything about the local shakedowns. The group's Web site currently says nothing about local laws and ordinances covering solar fees and taxes.

Even the California Solar Center, which bills itself as the “prime source of information on solar activity in California,” has little to offer on local laws, although its coverage of state laws is extensive.

Last year's failure of Proposition 23, which sought to scuttle the industry's prospects, seems to have blinded the industry to the possibility that local governments might see them as a cash cow and start milking them heavily.

There are a number of state laws, like the Solar Rights Act, that prevent local governments from halting the spread of solar systems, but fees, inspections, and taxes are not addressed by those laws, and people like Benoit have jumped through that loophole.

While the industry has focused on incentives and utility policies,  it needs to focus on setting standards for local inspections, inspection fees, and taxation or customers are going to be in for some nasty surprises.

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

Dana Blankenhorn has covered business and technology since 1978. He covered the Houston oil boom of the 1970s, began making his living online in 1985, and launched the Interactive Age Daily, the first daily coverage of e-commerce, in 1994. He has written for a host of off-line and online publicat...

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