Industry insiders say Ohio incentives fall short

3/7/2010

Tax credits? Project grants? Energy mandates?

Lawmakers can offer all of the above and more to persuade solar companies to open manufacturing plants in their states. And, according to dozens of solar-industry insiders, solar companies have been choosing states other than Ohio because they're receiving better incentive packages elsewhere.

But what makes one state's offer more attractive than another is up for debate, making it difficult for Ohio or any other state to know for sure what incentives would increase its ability to compete.

"There's no such thing as perfect solar policy," said Julie Blunden, vice president of public policy and corporate communications for solar-generation company SunPower, of San Jose, Calif. "And it's easy to take good solar policy and do a bad job with it."

She said the most attractive states are those with favorable solar policies and a large market for solar products. She mentioned California (about 70 percent of the U.S. solar market with a multibillion-dollar package to subsidize solar growth) as the established leader in policy and market size, followed by New Jersey.

Scott Sklar, who advises renewable-energy companies where to place manufacturing operations in the United States, lists a set of incentives the most attractive states typically offer. They include targeted tax credits, renewable-energy portfolio standards, access to the grid for solar energy, and loans for manufacturing.

Amy Heinemann, a state policy analyst for the North Carolina Solar Center, said Ohio's weaknesses are in the areas of direct tax incentives, interconnection standards, and net metering policy.

When discussing tax incentives, she said Ohio doesn't have anything as enticing as Oregon's 50 percent tax credit for renewable-energy equipment manufacturers, nor does it offer other eye-popping credits targeted toward solar companies found in states such as Michigan.

She also said Ohio's policies for interconnection (access to the grid for solar energy) and net metering (credit for energy generated against energy consumed) are not as strong as those in other states trying to recruit solar companies.

The best incentive Ohio has on the books, according to Ms. Heinemann, is its 2008 mandate for 12.5 percent of all electricity to come from renewable-energy sources by 2025. State government officials, from Ohio Gov. Ted Strickland on down, are quick to cite Ohio's energy standard as a primary key to the large-scale growth in the solar industry the state will experience - as early as this year.

Ohio's renewable-energy standard includes a solar carve-out, which industry analysts and government officials say will lead to the installation of more than 800 new megawatts of solar capacity.

But Ms. Blunden, who thinks that Ohio's solar market is still a few years away from developing, said the largest solar state - California - doesn't even have a solar carve-out in its renewable portfolio standard.

"You can take portfolio standards, tax incentives, grants, or any combination of those and create a market," she said. "It isn't one particular policy that will do it."