Joel Cannon, the CEO of tenKSolar, a manufacturer of solar panels, was photographed on tenKSolar's roof, Tuesday, August 2, 2012 in Bloomington, MN.
Elizabeth Flores, Star Tribune
Solar CEO: Energy policy is too partisan
- Article by: DAVID SHAFFER
- Star Tribune
- September 1, 2012 - 4:59 PM
Solar energy entrepreneur Joel Cannon has been thinking a lot lately about fossil fuels.
The CEO of TenKsolar, a solar-electric panel maker based in Bloomington, is among those who believe solar energy would thrive under the same tax breaks available to oil and gas companies.
Solar power receives state incentives and a 30 percent federal investment tax credit, which have helped finance many projects. But those subsidies are not permanent, unlike the oil and gas industry tax benefits.
That could change under a bill supported by Minnesota's two U.S. senators. It would let wind, solar and other renewable energy businesses establish themselves as master limited partnerships, which are sold like stock.
Oil and gas firms have used this structure for years to raise capital for pipelines, wells and refinery investments. Distributions are taxed at lower partnership rates, avoiding corporate income taxes. Returns often are 6 to 7 percent -- better than bonds.
Last week, Cannon talked with the Star Tribune about solar energy and incentives.
QFirst, how is business?
AThe solar business is actually booming. Solar equipment is at an all-time low in terms of cost, which means solar energy can be delivered more cost-effectively than ever. We are now shipping our fifth generation of product, which is world-class in terms of its ability to output more energy per square foot of rooftop with less weight and less cost. That's propelled us into many different markets around the world.
QWhat do you think generally about U.S. energy policy?
ATo me it's unfortunate that the concept of energy supply seems to be a partisan issue. The good news is that the cost of delivering a kilowatt hour from solar is below the cost for a kilowatt hour paid by many people in the world today, and that means solar is here to stay. If we simply acknowledge that and step back and say, 'Let's put some rational policies in place that treat various forms of energy on an equal basis,' then we will bring solar to the 20 to 30 percent level that it deserves in our energy portfolio over the next decade or two.
QSome people in D.C. think energy shouldn't be subsidized. What is your view?
ADirect subsidies to individual industries and companies, in my opinion, are generally not the best policy because they are subject to political influence. However, there are many structures that are set up to benefit different forms of energy that are not available on a level playing field to other forms of energy. Most folks are not aware that the natural gas boom was aided and accelerated by a tax-advantaged ownership structure called the master limited partnership, which has been available for over 20 years to fossil fuel energy sources -- and specifically not to renewables like solar.
QMaster limited partnerships in the oil and gas industry allow companies to raise money from individual investors by offering relatively stable distributions thanks to the tax breaks. Would that work for solar?
AI think it's a great idea, and it would be enough for solar to thrive. It would be the perfect replacement for when the investment tax credit expires, and perfectly fair, but you want to be careful to have a smooth transition.
QIs the solar industry in a financial position to offer steady distributions that draw investors to master limited partnerships?
ASolar is arguably the best-suited energy source to offer a preferred return because there is virtually no risk of the power plant not producing energy as long as the sun keeps shining, and there is no risk of the fuel costs increasing.
QDo you agree with a Minnesota state agency's conclusion last week that Xcel Energy's Solar Rewards rebate program for small-scale solar arrays should be retained through 2015 even though the utility wants to end it?
AIt doesn't affect us much, but much of the solar community was expecting a three-year term, so consistency is good. We'd love to see it transition to something tied to energy production.
QIn Minnesota, some solar projects are eligible for two kinds of rebates plus the federal tax credit, which can combine to cover up to 90 percent of the cost. What do you say to those who criticize that as too much subsidy?
AThose subsidies should be restructured and should be paid based on the energy generated from the system. We weren't responsible for creating any of those incentive structures. We would do it differently and I think we are not alone, that most in the solar industry in Minnesota would do it differently.
QPresidential candidate Mitt Romney's energy plan is focused on fossil fuels and is critical of green energy, contending that it kills jobs in other energy fields. As a businessman, what do you think?
AI believe that is absolutely, flat-out wrong.
David Shaffer • 612-673-7090
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