Solyndra in South Carolina?

August 3, 2015

Investigative Reports

Print Friendly, PDF & Email

SolyndraCould South Carolina experience its own Solyndra?

A state senator openly raised the question last week during a Senate Finance subcommittee hearing on a bill that would offer millions in taxpayer-backed tax credits to help prop up South Carolina’s fledgling solar industry.

“I hear stories nationwide where these solar businesses are not thriving,” Sen. Harvey Peeler, R-Cherokee, said during the Sales and Income Taxation Subcommittee hearing on H. 3346.

“It is a growing industry,” replied Andrew Streit, founder of the state Solar Business Alliance. “It’s not going to go away.”

“I thought several of the industries that did receive federal money did go away, and the money went away with them,” Peeler, the Senate majority leader, responded.

Peeler was referring to Solyndra, the California solar technology company that has been a source of embarrassment to the Obama administration for filing for bankruptcy in August after receiving $527 million in federal loans from the federal Energy Department.

Streit said Solyndra had developed a “new type of technology” that it had hoped would be cheaper than conventionally made solar panels. But there was “absolutely no way for them to compete” because by the time the company opened its factory, the price of conventional solar panels had dropped in half, he said.

“This was one manufacturer in a segment that has over 200 manufacturers,” Streit said. “Everybody said, ‘Look at this Solyndra going out of business.’ To me, I said, ‘Look at that Solyndra, went out of business. The industry is fine.’”

But Peeler was not entirely convinced.

“I have more questions than answers,” he said at the end of the hearing.

Still, despite Peeler’s reservations, the subcommittee voted to send the solar tax-credit bill to the full Senate Finance Committee. Though supportive of the bill overall, Sen. Billy O’Dell, R-Abbeville and subcommittee chairman, said that “we need to make sure the utilities are all right on the bill before we move forward.”

‘Well-Crafted Bill’

The bill, sponsored by Rep. Dwight Loftis, R-Greenville, passed the House last year. It has 28 co-sponsors.

“For someone who is in the industry, this is a well-crafted bill we would definitely support,” Streit said at last week’s hearing.

The Nerve reported in February 2011 that at least nine Senate and House bills, including Loftis’ proposal, that would benefit the solar industry had been introduced at the start of the current two-year bill cycle. As of last week, the total number had grown to at least 12.

But only Loftis’ bill has made any serious progress since last year. Any bills that don’t pass the General Assembly  this year would have to be re-introduced next year, and the legislative process for those proposals would start from scratch.

In the House-passed version of Loftis’ bill, individuals and corporations could claim a tax credit equal to 35 percent of the costs of solar energy equipment used for “water heating, active space heating and cooling, passive heating, daylighting, generating electricity, distillation, desalination, detoxification, or the production of industrial or commercial process heat.”

The credit could be claimed against the eligible taxpayer’s individual income, corporate income, bank tax, license fees, insurance premium taxes, or any combination thereof.

Current law allows for an income tax credit of 25 percent for purchase and installation costs, though it is capped at $3,500 per facility. The House version of Loftis’ bill would set tax-credit caps at $1,400 to $10,500 for residential installations, depending on the type of equipment; and $2.5 million for commercial and all other non-residential projects.

The Senate Finance subcommittee’s version would sweeten the incentives pot even more when compared to the House proposal. Among other things, the Senate panel’s amendments would:

  • Allow the credits to cover installation as well as purchase costs;
  • Increase the lowest eligible tax credits for residential purposes to $3,500 from $1,400;
  • Shorten the time period for eligible taxpayers to claim credits for non-residential projects to three from five years, thus speeding up reimbursement;
  • Allow eligible taxpayers to claim both state and federal tax credits for solar projects; and
  • Increase the total amount of tax credits allocated for all projects from tax years 2012 through 2016 to $35 million from $29.5 million, with 50 percent of the total allocated to large energy users, up from a proposed 40 percent for that group.

A fiscal impact statement on the Senate panel’s version of the bill has not been done. The state Board of Economic Advisors estimated last year that the House version would reduce general fund revenues by $271,000 had it been passed for this fiscal year, though most of that amount would have been claimed by just one unidentified commercial taxpayer.

The BEA said that as of 2009, 100 taxpayers collectively had claimed $208,930 in existing solar-energy tax credits, or a total of about $2,100 per taxpayer.

Good Money after Bad?

During last week’s subcommittee hearing, Bruce Wood, founder and CEO of Sunstore Solar in Greer and chairman of the South Carolina Solar Council, said Loftis’ bill would help create jobs in the Palmetto State.

“This bill was designed to create jobs here in South Carolina, to bring energy dollars back into the state,” he said. “This (bill) is like the carrot. We’re trying to create, to encourage … the public-private partnerships to develop our energy infrastructure for the future,” Wood added.

Not all public-private partnerships on solar projects in South Carolina have produced results, though.

The Nerve has reported extensively, for example, that California-based AQT Solar has yet to produce its promised $460 million solar-cell manufacturing plant in Richland County – bringing with it a purported 1,000 jobs – despite an offer of incentives that is projected to cost state and local taxpayers nearly $25 million over 10 years.

When questioned last week by O’Dell, Wood said he lost a bid to install a massive solar-panel system at Boeing’s new aircraft assembly plant in North Charleston, noting: “It was not the competencies but the weakness of my financial sheet because I was a smaller company … I was embarrassed for South Carolina I did not win the contract.”

What wasn’t pointed out during the hearing, however, was that the manufacturer of the 18,000 solar panels for Boeing – Michigan-based Energy Conversion Devices and its wholly-owned subsidiary, United Solar Ovonic – filed for bankruptcy last month.

Those companies did not receive any state or local incentives, officials told The Nerve. But they suffered the same fate as Solyndra.

Investigative reporter Eric K. Ward contributed to this story. Reach Brundrett at (803) 254-4411 or rick@thenerve.org.