Christopher Mitchell, Director of the Telecommunications as Commons Initiative has been spending many hours on the road these days. Why? Interest in publicly owned broadband networks continues to grow as communities search for savings, economic development, and connectivity on the local level and more organizations seek out Chris’ expertise. From policy to implementation, ILSR continues to reach … Read More
ILSR’s fact sheet is a reliable quick reference guide for policymakers and citizens. As discussion about the telecommunications landscape expands, language about broadband abounds. In order to make informed decisions without stumbling over terminology, ILSR has assembled some basic facts about broadband. This fact sheet is a great reference for anyone who may take up the … Read More
As part of the FCC’s Gigabit Cities Challenge, the agency plans to host a series of workshops over the next several months. The workshops will focus on tools communities can use to expand connectivity, changing telecommunications policy, and will present experts from the field. Christopher Mitchell participated in the first workshop on March 26th in Washington, … Read More
This new resource shares real world examples of public savings directly connected to municipal networks. Publicly owned broadband networks provide opportunities for local savings to taxpayers. Local and regional governments find new and unexpected ways to cut costs when they build their own next-generation networks. In addition to saving connectivity fees for administrative facilities, local broadband … Read More
This report, done for the Solar Works for Minnesota campaign, explores the value of solar power on schools, libraries, and other public buildings in Minnesota. It was co-authored by John Farrell of ILSR and Christina Mills of IEER. Download the Report Highlights Minnesotans spend more than $20 billion dollars every year on these energy imports. With … Read More
You’re a city manager hoping to cut electricity costs at sewage treatment plant, a school administrator looking to power schools with solar, or a state park official needing an off-grid solar array for a remote ranger station.
But unlike any private home or business, you can’t get 50% off using the federal tax incentives for solar (a 30% tax credit and ~20% from accelerated depreciation). That’s because the federal government’s energy policies all use the tax code, and your organization is tax exempt.
What about a public-private partnership? The private entity puts up some money and gets the tax benefits, and the public entity only has to pay half. It can work, if you’re lucky, although a good portion of those tax benefits (half, in recent years) pass through to that private entity for their return on investment, not changing the price of your solar array.
But the legal niceties also matter. One common option is a lease, where the public entity leases the solar panels from the private one. One big problem: the IRS doesn’t allow the private entity to collect the 30% tax credit if they lease to a public entity.
The cash grant program in lieu of the tax credit allowed leasing, but it expires in December. Furthermore, it disallowed depreciation of the solar array, equivalent to 20% off.
Another clever arrangement is a power purchase agreement (PPA), where the third-party owns the solar array and simply sells the power to the school or city. The third-party can claim both the tax credit and depreciation, but if you live in a state with a regulated utility market (and no retail competition), your utility might slap you with a lawsuit for violating their right to exclusive retail service.
The following chart illustrates the financial challenge for public entities created by using the tax code to support solar.
Even with a lot of legal creativity, the public sector is often stymied in accessing both federal solar incentives. The result is that private sector solar projects always get a lower cost of solar, because the public sector can only access federal incentives through (costly) partnerships with third parties.
Using the tax code for solar (instead of cash grants, production-based incentives, or CLEAN Contracts) is bad for the solar business, bad for taxpayers and bad for ratepayers. It’s time to change course, and let the public sector go solar, too.
“Unlike the public sector, the private sector is bred for efficiency. Left to its own devices, it will always find the means to provide services faster, cheaper, and more effectively than will governments,” said James Jay Carafano. I suspect the vast majority of Americans would agree with Mr. Carafano. They probably consider the statement self-evident. The facts, however, lead to the opposite conclusion. When not handicapped by regulations designed to subsidize the private sector, the public sector often provides services faster, cheaper and more effectively.… Read More
