Utah eliminates solar tax credit

Gov. Gary Herbert signed HB 23 into law yesterday - eliminating the state's solar income-tax credit after 2021.

The Utah solar industry has been under siege since last year, when Rocky Mountain Power proposed a rate structure that would ahve charged new solar customers fees to cover what it claimed was a “cost-shift” from solar customers to non-solar customers. It prompted public outrage, including from Robert Redford, who penned an eloquent and forceful defense of solar energy in the state. Eventually, RMP backed down from its proposal.

But a new attempt to stifle rooftop solar energy emerged at the same time that slipped under the radar, and Gov. Gary Herbert signed it into law yesterday. House Bill 23 will eliminate the state’s solar income-tax credit after 2021.

Currently, Utah residents can claim $2,000 on their state income-tax returns if they install a solar-energy system. With the new law that credit will steadily be reduced by $400 per year until it’s completely eliminated entirely after 2021. The first reduction would be from $2,000 to $1,600 in 2018.

Rep. Jeremy Peterson, the bill’s sponsor, says the state lost $20 million in tax revenue in 2016 and thus harmed the state’s school systems. In Utah, public education is funded by income taxes.

The reduction in incentives staved off an attempt by the legislature to impose hard caps on the number of Utahans who could have claimed the credit, which would have effectively limited the potential growth of the Utah solar industry. Faced with two options, each of which would hurt the state’s industry, the solar industry accepted the gradual elimination as the outcome that would hurt the industry least.

When the bill was introduced, the solar industry actively chose not to contest it.

“We would have preferred to see the tax credits live on,” Ryan Evans, president of the Utah Solar Energy Association, told the Salt Lake City Tribune at the time. “Realizing the political pressures and budgetary pressures this year,  however, we aren’t contesting this. Solar energy is becoming more and more affordable every year, and I think we can absorb this.”

The timing of Herbert’s signature is curious, given Utah’s meteoric rise to the No. 7  state in solar’s economic impact. The Solar Energy Industry Association, in conjunction with GTM Research, noted Utah gained 1,729 solar industry jobs in 2016, a stunning 65% increase in the state’s solar workforce. Solar now employes 4,408 workers and ranks 14th in the nation for the number of solar jobs by state and seventh nationwide on a per capita basis.

Utah also shot up the list of top solar states in the country. The state’s solar market increased 500% year-over-year, to 1.5 GW  from 248 MW in 2015. Utah is also one of nine states that have installed more than one gigawatt of solar capacity.  GTM also reported that Utah’s commercial installations grew 500% in 2016.