January 24, 2018

As Trump delivers blow to solar industry nationally, NM tax credit could ‘zero out’ cost increases

Michael Vadon, via Wikimedia Commons

This week, the Trump administration announced it was imposing new tariffs on imported solar panels and modules—a move that will hit installation companies and consumers alike. But in the New Mexico State Legislature a trio of Democratic state representatives wants to give solar development in New Mexico a boost.

House Bill 87 would give people who install a solar thermal system or photovoltaic system at their home, business or farm a ten percent credit of the purchase and installation costs, up to $9,000. If passed, the bill would authorize the state’s Energy, Minerals and Natural Resources Department to pay out up to $5 million in tax credits for the year.

The bill is sponsored by Reps. Carl Trujillo of Santa Fe, Debbie Rodella of Española and Patricio Ruiloba of Albuquerque. “Because of our vast resources here, of sun, bills like this make complete sense for long term-sustainability,” Trujillo said.

There is already a federal tax credit for solar—30 percent for residential solar thermal and PV systems through 2019, then a 22 percent credit until the end of 2022. For ten years, New Mexico had a similar state tax credit, but it expired at the end of 2016. According to the Energy, Minerals and Natural Resources Department, that program spurred the deployment of 220 million BTUs per day of solar heating energy and 40 megawatts of solar electricity.

Last year, when legislators got to the Roundhouse, Trujillo said, the state budget was in a structural deficit and there just wasn’t room to reinstate the solar tax credit. This year, there are still budget issues, he said, but new revenues make the solar tax credit a smart move.

Newly-elected Senate Majority Whip Mimi Stewart, D-Albuquerque, is also a long-time proponent of solar energy.

“Scientists and engineers are screaming at the top of their lungs because the scientific projections for climate change have all been wrong,” Stewart said. “It’s happening much quicker, much faster, and it’s a larger issue than anybody thought.”

Due to warming, changes are occurring across the globe and the impacts are obvious from the Arctic to the coral reefs off Australia.

“The military talks about wars in the Middle East and Africa that are driven by climate change. The Syrian war, for example, is driven by climate change, when huge numbers of people can no longer farm, on lands that no longer have water,” Stewart said. “This is not idle chatter.”

Gov. Susana Martinez would need to sign the bill into law if it passes the Legislature. Martinez spoke with pride of the state’s energy sector in her recent State of the State address, most notably oil and gas. But she did mention that Facebook’s data-storage center in Los Lunas will be “powered by New Mexico renewable energy.”

Trump delivers blow to solar this week

New Mexico’s bill comes just as President Donald Trump delivered a swift blow to the solar industry in the United States.

This Monday, Trump announced he was raising tariffs on imported solar panels (and washing machines) from countries like China. Last year, the Georgia-based manufacturer Suniva declared bankruptcy and blamed cheap imports for its financial problems. The company petitioned the U.S. International Trade Commission (ITC), asking for higher tariffs. It was joined by another manufacturer, Solar World, which is German-owned.

Certain solar cells will be exempted from the new tariffs over the next four years, but most will be hit with the new fees, graduated from 30 percent in the first year to 15 percent in the fourth year. The tariff is expected to take effect next month.

“The impacts on New Mexicans are not dissimilar to those nationwide: everyplace, we’re going to see the worst impacts are on installers,” U.S. Sen. Martin Heinrich told NM Political Report.

U.S. Senator Martin Heinrich. Official photo.

Last year, the Democrat from New Mexico testified before the U.S. Trade Representative and the ITC to oppose raising the tariffs. The Democrat and North Carolina Republican Sen. Thom Tillis previously led a bipartisan effort among states with growing solar industries asking the ITC to reconsider its recommendation, a move they said would double the cost of solar panels in the U.S.

Trump’s decision will cost American jobs, Heinrich said. “It’s very much going to impact business in my state and a number of other states,” he said. “This is one of those situations where if this trade case had been filed years ago, there might still be a number of domestic manufacturing jobs to defend. But right now, across the board, it’s largely just going to be harming American jobs.”

The U.S. just isn’t a leading manufacturer on solar cells and panels, said Heinrich. But American companies do make value-added components, like tracking, electronics and inverters. “All of those jobs are going to see negative pressure because of the price changes,” he said. As the demand for solar installations falls with the rise in prices, American companies making those components will lose customers.

Heinrich added that the Trump administration used the ITC case to send a message to the fossil fuel industry. “We’re going to ride through this,” Heinrich said. But in the short-term, many people’s lives are going to get caught up in the Trump administration’s agenda.

Last week, the Solar Energy Industries Association sent a letter to Trump, saying that imposing the high tariffs recommended by the ITC would “lead to the layoff of tens of thousands of workers, cause companies to stop investing in the United States and bring an American economic engine screeching to a halt.” According to that letter, the solar sector employs more than 260,000 people in the U.S. Nationally, only about 14 percent of solar industry jobs are in manufacturing; most are in installation. In comparison, the coal industry—which Trump has sought to protect by weakening environmental protections—employs fewer than 80,000 people in the U.S.

In a press release, U.S. Trade Representative Robert Lighthizer said U.S. producers had been “injured” by imports. The president’s acceptance of the commission’s recommendations, he said, “makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses in this regard.”

The tariff is bad news for consumers in New Mexico, said Regina Wheeler, CEO of Positive Energy Solar, which installs solar systems throughout the state. “All solar panels are imported now, there are no U.S. manufacturers,” she said. SunPower was one such manufacturer, but the company moved its manufacturing facilities to Mexico a few years ago. As the price of solar goes up, due to the Trump administration’s move, the state’s tax credit has become all the more important, she said: “We could protect the industry and the consumers in New Mexico by passing the tax credit.”

Even those who are aren’t even considering adding solar systems to their homes or businesses benefit from a robust solar industry in the state, she said. Right now, there are more than 100 companies in New Mexico employing people in the solar industry, and in 2016, the state’s solar workforce grew by 40 percent.

Wheeler also noted that Trump’s strategy of raising tariffs will drive down demand for the solar components that are manufactured in the U.S., like the racking for solar systems made by two New Mexico companies.

“We have the second best solar resources in the country, a lot of open land, and it’s been in our heritage for a long time,” Wheeler said. “We could be a leader, we could be bringing more revenue into the state.”

The office of Rep. Steve Pearce, a Republican who is running for governor, issued a press release Tuesday evening in support of the new tariffs, which he said moved the U.S. closer to an “all of the above” energy plan while developing “greener sources of energy.”

“By implementing an import tariff today on foreign import companies, New Mexico could once again become a power player in the nation’s solar energy production,” Pearce said, bringing job growth and revenues.