Incentives from the California Solar Initiative reduce the installed cost of a solar system to homes, businesses and government/nonprofit buildings that are connected to the utility grid. This sounds like a fabulous idea...encourage people to install solar on their homes and businesses, make it more financially viable, encourage entrepreneurs to start solar installation businesses. This last point should result in electricians being cross-trained on solar, encourage new solar installers to enter the field, all helping to create a permanent new "green" economy.
The problem is that the solar incentives decline over the 12 month period, such that most of the installations happen in the first 3-6 months and, by the end of the year, companies are laying off solar sales people, installers, etc. Only to get kick started the following January, presuming that the incentives are renewed. That's what happened last year (2008), and it looks like its happening again this year (2009).
Why is this a problem? Would you open any kind of business if you knew in advance that that business would suffer serious decline in the last 6 months of the year? Or that year to year, your business activity is at the whim of a policy analyst? More importantly, would you pay for the training of employees to develop the skills to make that business successful? I wouldn't.
An alternative would be to offer a constant incentive all year long, resulting in a more permanent - and predictable -- business activity. Business owners can then plan - and train new employees - with the knowledge that their business is more predictable.
Are there reasons why its done the way it is? Yes. Are they any good? No.
We want a clean, green economy. We know that entrepreneurship is the economic engine that will fuel adoption of new energy sources. But we permit policy analysts that know little to nothing about running a business to legislate incentives that cause chaos in one of the most promising technologies available to us today.
Jim Hamerly
College of Business Administration, Cal State San Marcos
Board of Directors, cleanventure.org, a non-profit cleantech incubator
owner of one on-grid and one-off grid solar powered home
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