Dollars for Runways
While the premise makes sense, the reality is another story. New Orleans isn’t rife with solar energy installations. In fact, you’d have to do some searching to find the few local homes – and fewer businesses – that currently derive a portion of their electric power from the sun’s rays.
The picture could change, however, and some people familiar with the local construction scene believe the chances are good that it will. They say the potential for a surge in solar power is growing thanks to:
- the expected ongoing local need for new construction;
- rising costs of energy from conventional sources; and
- new state tax incentives that can reduce the upfront cost of solar installations.
That action has begun in several locations around town, most notably in the Lower 9th Ward where nonprofit organization Global Green USA is developing new “green” housing in the Holy Cross area. Global Green’s first Holy Cross home – complete with solar roof panels and solar water heater – opened to public view recently, and the organization is proceeding with several others, supported financially by Home Depot Corp., among others.
National attention to the city’s construction needs should help keep the drive alive. Last year, the U.S. Department of Energy named New Orleans one of 13 “solar America cities.” The initiative is an eight-year program designed to increase local awareness of the benefits of solar power and encourage cities to create solar-friendly business environments that can help the industry grow. The Energy Department will provide technical assistance to help New Orleans benefit from the designation.
Building on the federal attention, the Louisiana Legislature last year came up with incentives that give homeowners another reason to consider going solar. Lawmakers created a tax credit that can reduce a homeowner’s initial costs for installing solar-electric (also known as “photovoltaic”) systems or solar-thermal systems used for space heating, space cooling or water heating. The credit enables homeowners to reduce their income taxes by an amount equal to 50 percent of the first $25,000 of a system’s cost. The state also made such installations exempt from property taxes.
Given that a solar-electric system for a house of moderate size typically costs in the vicinity of $20,000, the tax credit could become an important factor in deciding whether to give solar energy a try.
Buddy Justice, an environmental consultant with the Louisiana Department of Natural Resources, says the credits have already had an impact on the availability of solar equipment in the area. A few years ago, he says, only three or four major sellers of photovoltaics operated in Louisiana. “Since passage of the tax credits, that number has easily doubled or even tripled,” he says.
Justice says homeowners can combine the state credit with an available federal tax credit that’s worth up to $2,000, further paring their costs.
The state also has required electric utility companies to make “net metering” available to customers who use alternative energy sources. The meters enable consumers to receive credits on their utility bills for power generated through solar or wind installations.
Incentives aside, solar-electric technology remains a somewhat high-cost alternative to traditional power resources. This is particularly true in Louisiana, where utility rates are relatively low. Justice notes that the average electricity rate in New Orleans is just over 11 cents per kilowatt hour. That’s less than half the price consumers are likely to pay in some states, such as California.
Energy experts say several factors could help stimulate greater demand for solar energy and spark development of the industry here. Chief among them: Solar technology needs to become more efficient and thus cheaper. Research currently under way suggests that this goal is within reach. A thinner light-absorbing film that’s already in use in some areas may prove a good, reasonably priced alternative to solar cells made from rare and expensive metals. In addition, researchers are working with still other materials and methods that show promise for more efficiently collecting and storing energy from the sun.
Also, an increasingly strict regulatory environment could give solar energy a boost. Concern over excessive carbon dioxide in Earth’s atmosphere has given rise to efforts by some governments to curb these emissions and encourage the use of non-fossil fuels to generate energy. If states begin to enact such regulations en masse, momentum could build behind renewable energy sources such as solar.
In tandem with these factors, new manufacturers of solar materials and equipment are likely to begin springing up. More producers should lead to lower pricing. It’s possible that New Orleans could become a player in this part of the scenario. Word is that a major solar manufacturing is considering the city as a potential site for a new plant. If the plant should become reality, New Orleans would stand to gain not only a major supplier of important, future-oriented technology, but also a significant number of jobs and an attractive industry hub that could draw related businesses to the area.