Author Archives Laura Arnold

IndianaDG Pres. Laura Arnold Testifies Against NIPSCO Fixed Charge Increase; CAC Says “Nix the Fix!”

NIPSCO meeting

Commissioners from the Indiana Utility Regulatory Commission (IURC) listen as members of the public voice their concerns over a requested rate increase by NIPSCO. (Jim Karczewski / Post-Tribune)

Residents question need for NIPSCO rate hike

By Michelle L. Quinn, Post-Tribune, December 15, 2015 2:20 pm

Northwest Indiana residents may not have packed the Hammond High School auditorium for the Indiana Utility Regulatory Commission's hearing on a proposed NIPSCO rate increase, but those who did shared the same sentiment:

Don't raise the rates.

Everyone from pastors to politicians attended the Monday night hearing to try to ensure the utility company won't institute a $9 price hike – to $20 from $11 -- to its monthly flat rate.

The increase, if approved, would give NIPSCO $126.6 million in which to work, according to the Indiana Office of Utility Consumer Counselor.

Many of the people who came to remonstrate against the increase were on fixed incomes. Mary Ellen Slazyk, of Hammond, said she gets $694 a month from Social Security.

"Last month, my bill was $76.44; that's no problem. This month, the bill is $289.29, and this is just the beginning of winter," Slazyk said, adding that she did receive a one-time payment assistance of $475 from NIPSCO and a temporary rate reduction last year. "If (NIPSCO isn't) profitable, maybe someone else should take it over, because (its executives) aren't living paycheck-to-paycheck like many of us are."

The Rev. Asher Harris and the Rev. Dwight Gardner, both of Gary, pointed to their city's unemployment rate and that their congregations are predominantly older and on fixed-incomes as well. Theodore McClendon, also of Gary, called the proposed hike "an affront to people."

"There's an issue of skepticism here. We have no choices, no competition and no comparison or negotiation," McClendon said. "This is like a football coach from a major university; you know they make tons of money, so what if attached to their student fees was this man's severance?"

NIPSCO spokesperson Nick Meyer said the company, contrary to predominant belief, isn't forward looking with its request. Rather, the company has to prove to its stakeholders that expenses and improvements it's made are justified.

"Our last rate hike was in 2011," Meyer said. "Our biggest cost is power generation, followed by labor costs. At the end of the day, we want to determine rates that are both fair to the customers and the company."

But Laura Arnold, president of the Indiana Distributed Energy Alliance from Indianapolis, doesn't understand how this hike can be fair when there's no way to tell how the company came up with the numbers.

"When (NiSource executives) presented these changes in September, they said that they could charge a full $83.95 in fixed-rate charges, but that by charging only a 'modest' $20, they were gradually introducing the hike. This is without any electric consumption," she said.

Arnold said the current standard with charging for utilities is a low connection fee and rising generation charges, so to change the flat rate so drastically – a move that 25 states are considering or will be within the next two years – will push those who can afford to "go off the grid" to do so more quickly. That would leave those who're least able to pay the fee, she said.

"The commission needs to find another way to look at this issue," Arnold said. "It really deserves a special study."

Meyer said all information and data is available to the public, but some, such as the rate formula, need to be requested.

Meyer said public hearings will be held until the February evidentiary hearing before the IURC. The decision should be finalized by late summer.

Michelle L. Quinn is a freelance reporter for the Post-Tribune.

NISPCO wants $20 per month, before you use ANY electricity!

NIX the FIX! Tell NISPCO NO WAY to a higher fixed charge!

NIPSCO wants to raise your electric rates by 11.4% and your monthly fixed customer charge by a whopping 81.8%! This amounts to a monthly bill increase for the average NIPSCO residential customer of $16.79 or 21.2%.

For the second time in 5 years, NIPSCO has filed a base rate case at the Indiana Utility Regulatory commission (IURC). NIPSCO monthly electric bills have already increased nearly 30% over the last ten years. At the same time, Hoosier households struggle with declining and stagnant wages and significant increases in the cost of energy, health care, food, and other necessities. Enough is enough!

NIPSCO Average Monthly Electric Bills have increased nearly 30% in the last 10 years!

NIPSCO wants to significantly increase your monthly fixed charge from $11 to $20. This is the amount you pay regardless of how much energy you use.

According to NIPSCO’s testimony, this is only the beginning. NIPSCO states in their testimony that it is their intent to gradually “increase the customer charge that applies to residential and small commercial customers,” going on to state, “the customer costs alone support a charge of $22.51, and the full fixed cost would support $83.95.” This would mean an eventual monthly fixed charge for residential customers of $83.95 whether or not you use a single kWh of electricity!

Charging more for using less through higher fixed charges disproportionately hurts households on low- or fixed-incomes. It diminishes the longstanding principal of encouraging conservation. It also imposes an unfair “tax” on farms, homes and businesses that choose to install solar panels, wind turbines, or other distributed energy technologies on their property.

NIPSCO blames the need to increase the fixed monthly charge on reduced energy sales as a result of increasing investments in energy efficiency and customer-owned generation like rooftop solar, as well as reductions in industrial energy usage due to factories closing and/or moving.

Customers should not be penalized for investing their own money to make their business or home more efficient or to generate their own energy!

Residential and small business customers should not be forced to pay more because industrial facilities are shutting down. While NIPSCO may be collecting less revenues from industrial customers, NIPSCO’s cost to serve residential and small business customers DOES NOT INCREASE as a result. Cost-shifting to protect NIPSCO’s earnings is not equitable or fair.

There is one bright spot in the NIPSCO rate case. NISPCO is asking to create a low-income program which will provide a one-time summer discount of $50 to help mitigate the impact of increasing bills on low-income households. All residential customers would pay a marginal charge of 20¢ per month to help keep the lights on in these homes. While the program does little to address the problem of monthly bill affordability and needs to be more robust, NIPSCO should be applauded for voluntarily proposing a program to help the most vulnerable among us.

NIPSCO Electric Base Rates Comparison
for the average customer using 698 kilowatt hours of electricity per month

This is the core of your electric bill - what you are charged for fixed costs and usage fees. This part of your NIPSCO bill makes up about 86% of your current total NIPSCO bill as of November 1, 2015.

Trackers: the other 14% of your

NIPSCO Electric bill not included in "rates"

These trackers, also called “riders,” are currently included in your NIPSCO bill and added to the average bill you see above. The amount collected through trackers changes frequently as some are adjusted quarterly, while others change on a semi-annual or annual basis. NIPSCO is asking to consolidate Riders No. 672 & 673 and also proposes to continue using all of the other trackers. How much the trackers will add to your monthly bill moving forward is unknown to everyone but NIPSCO.

Total NIPSCO Electric Bill including trackers

Take Action Now!

Send comments to the OUCC and make your voice heard!

Indiana Office of Utility Consumer Counselor

Attn: David Stippler

115 W. Washington St.

Suite 1500S

Indianapolis, IN 46204

uccinfo@oucc.in.gov

(888) 441-2494 phone

Tell the OUCC and the IURC Regulators:

To oppose NIPSCO’s request to increase fixed monthly costs and charge you more for using less.
To oppose shifting costs to residential and small business customers to protect NIPSCO’s earnings.
To fight for residential customers to ensure that monthly bills are affordable, just, and reasonable.

Make sure to reference Cause Number 44688 in your comments!

Download CAC Fact Sheet HERE> CAC Fact Sheet 11-09-15 NIPSCO 44688

Odd Michigan lawmaker coalition fights solar rate cut

Posted by Laura Arnold / December 09, 2015 / Posted in solar, wind / No Comments

Odd Michigan lawmaker coalition fights solar rate cut

Gary Heinlein, The Detroit News 8:18 a.m. EST December 8, 2015

Michigan’s two biggest power companies are locked in a battle with an unusual coalition of liberal Democrats and conservative Republicans over how much to pay for electricity from customers who install solar panels to lower their utility bills.

STORY HIGHLIGHTS

Power firms want to cut in half the rate they pay for electricity from customers with solar panels
The rate cut is opposed by an unusual partnership of liberal Democrats and conservative Republicans
The “green tea” coalition pushes policies for alternate energy sources and more choice for consumers
Utility companies argue their hourly electrical rates include a small subsidy to solar panel users

DTE Energy and Consumers Energy want to cut in half the rate they must pay to such consumers, arguing that the current “net metering” rate amounts to a subsidy that is unfair to other electricity consumers.

But the “green tea” coalition of environmental Democrats and tea party-oriented Republicans say they oppose the utilities’ proposal because they want to promote more power choices for customers and the expansion of alternative energy sources.

“We ought to be incentivizing diversity and competition in our energy market ... but the posture of the big utilities is to oppose all competition and diversity,” said tea party-oriented Republican Rep. Gary Glenn of Midland, who is aligned with renewable power advocate Jeff Irwin, D-Ann Arbor.

The utility companies argue their proposal is fairer to all of their other customers, whose hourly electrical rates arguably include a small subsidy to solar panel users that will grow as more homeowners turn to self-generated energy.

“These customers (solar panel owners) still are using the grid,” said DTE Energy renewable energy director Dave Harwood. “It’s several million dollars per year that gets spread over all of our other utility customers.”

The battle is a smaller but still intense fight in the larger debate about how lawmakers should rewrite the state’s energy laws. In March, Gov. Rick Snyder called for a switch from coal to natural gas as the main source of base electrical generation, and set an ambitious goal of trying to satisfy up to 40 percent of the state’s power needs within a decade from wind turbines, other renewable sources and strong energy-saving measures.

Self-generated solar energy is a related issue involving a small but growing portion of the two power giants’ 4 million Lower Peninsula customers.

About 1,840 utility customers have spent as much as $20,000 to $30,000 apiece for solar panels to electrify their lights and appliances as well as feed power into the electrical grid for an offsetting credit on their monthly bills. They’re entitled to be credited at a “retail” rate of 15.4 cents per kilowatt hour through a billing mechanism called net metering, Harwood said.

There could be significant growth of this little-used option as more consumers become aware of it and are attracted to solar energy’s declining costs, utility officials acknowledge. So DTE and Consumers want to reduce its future impact on their bottom lines while rolling out their own solar setups to meet the demand for more green energy. Both companies are publicly traded.

There is Senate legislation, including one bill sponsored by Republican Sen. John Proos of St. Joseph, that calls for the rate reduction. A package of energy bills sent to the House floor contain complex amendments whose impact on net metering is unclear.

The utilities’ proposal would hurt Mark Hagerty, who owns a Pontiac solar panel business that he expects to clear $1 million in sales this year. Hagerty said it would would harm sales to customers such as David Reed of West Bloomfield, who installed solar panels on his home to save money.

“Power companies for the first time are encountering competition and are trying to quash it,” Hagerty said. “It’s very unfair. We’re putting power into the grid that’s worth three times what we’re taking off the grid.”

That’s because solar panel users send power to the grid during peak-use daylight hours, when utilities are allowed to charge their highest rates, and draw electricity off the system at night when power is worth one-third as much, he said.

‘I don’t pay a bill’

Nancy Popa, Consumers energy supply operations-renewable energy director, said self-power customers are getting a special deal that doesn’t require them to pay their full share of costs to maintain utilities’ “poles and lines.”

“They use it 24 hours per day ... to import or export (power),” she said. “If they’re generating energy, we believe they should be compensated at the rate of energy — not energy plus the distribution costs.”

“They also tend to be our more-affluent customers,” said DTE’s Harwood, adding that not everyone can afford $20,000 to $30,000 for solar panels and the extra costs would be shared by less-affluent customers.

“All I know is that I don’t pay a (power) bill,” said West Bloomfield’s Reed, whose ground-level solar panels went online in October 2010. He builds up credits on sunny summer days and cashes them in when his panels are idle on overcast winter days.

The Bloomfield Hills High School music teacher, who plans to retire at the end of the year, said he feels secure having his home paid off and a home-based energy system that pays for itself.

Reed hasn’t followed the issue closely but said the utilities’ proposal “sounds like a power grab.”

Western Michigan solar panel user Daniel Zimmer charged that the utilities are using “propaganda” to try to strongly discourage other customers from generating their own power.

Zimmer and his wife live in a 1,200-square-foot home on 11 acres near West Olive. He said he installed a 5-kilowatt solar array in 2011 and boosted it to 10 kilowatts with more panels in 2013 as an alternative to investing that money in a 401(k) plan for his retirement.

“There are assurances the sun is going to shine,” said Zimmer, who doesn’t consider himself affluent. “You never know what’s going to happen on Wall Street.”

He said his solar panels generate enough excess power that he has built up a $1,300 credit with Consumers Energy. Nevertheless, he said, he pays a $20 monthly utility charge.

‘Green tea’ ideas

Glenn and Irwin reject the utilities’ arguments as theoretical, unfair and shortsighted.

“We approach this issue from very different sociological angles ... (but) both believe people should be able to generate power and be paid a fair price when they generate it,” Irwin said.

Among pending House energy bills with unknown prospects are at least two involving green-tea coalitions:

■Glenn and six other Republicans are allied with Rep. Rose Mary Robinson, D-Detroit, and two other Democrats on a bill, opposed by the utilities, that would entitle groups of customers to partner in solar arrays or wind turbines and be reimbursed for excess power they’d generate and feed into the system.

■Irwin, Robinson and four other Democrats are joined by Republican Reps. Ed McBroom of Vulcan and Larry Inman of Williamsburg as sponsors of a bill that would reinforce the right of alternative energy customers to be credited at retail rates for power they supply the grid.

Irwin argues solar energy customers pay retail power rates for what they use when their panels are out of commission at night, so they at least should be credited at or near average retail rates when they pump high-value energy into the system during the peak demand hours between noon and 6 p.m.

Glenn says communities, neighborhoods, Farm Bureau chapters or churches should be able to collectively own a solar array or a wind farm serving their energy needs. For excess power they send into the system, he said, they should be reimbursed at retail rates, minus a power grid maintenance fee negotiated with the utilities.

“You don’t put all your eggs in one basket,” Glenn said. “The more diverse and more competitive the market is, the more secure it is.”

Meanwhile, DTE and Consumers are arguing they can provide solar energy cheaper than customers could on their own.

DTE has the state’s largest solar panel spread at Domino’s Farms near the M-14 and US-23 intersection outside Ann Arbor, plus 22 smaller solar arrays and four more on the way.

DTE is doing so in part so it can offer customers opportunities to buy into the utility’s solar panels rather than installing their own. Economies of scale make DTE’s solar power a better deal, Harwood claims.

Consumers Energy is preparing to build “solar gardens” at Grand Valley State and Western Michigan universities with the same goal.

gheinlein@detroitnews.com

WSJ: Obama and Bill Gates to Launch Clean Energy Initiative

Posted by Laura Arnold / November 30, 2015 / Posted in Uncategorized / No Comments

Obama and Bill Gates to Launch Clean Energy Initiative

The announcement of the plan coincides with the start of an international climate conference in Paris

Watch video http://on.wsj.com/1IuZzSt

By COLLEEN MCCAIN NELSON

Nov. 29, 2015 7:00 p.m. ET

84 COMMENTS

PARIS—President Barack Obama and Microsoft co-founder Bill Gates will launch a multi-billion-dollar initiative Monday to accelerate clean-energy research and development as part of a global effort to fight climate change.

The announcement is timed to provide a jolt of momentum as world leaders gather in Paris for the start of a two-week summit focused on forging an international agreement to cut greenhouse-gas emissions. The president and Mr. Gates will join with other heads of state and investors to detail complementary public and private commitments to clean-energy innovation.

The goal, Obama administration officials said, is to speed the pace of progress on new technologies that will help curb emissions and limit the rise of global temperatures.

Brian Deese, a senior White House adviser who specializes in climate issues, said the initiative “should help to send a strong signal that the world is committed to helping to try to mobilize the resources necessary to ensure that countries around the world can deploy clean energy solutions in cost-effective ways.”

The 20 countries that have signed on to Mission Innovation will pledge to double their investments in clean-energy research and development during the next five years. The U.S. now spends more than $5 billion annually, administration officials said.

The participating countries, which represent about 75% of global carbon-dioxide emissions from the electricity sector, include China, India, Brazil, Indonesia, Saudi Arabia and France. The diversity of the countries’ energy interests should help ensure a range of new technologies is developed, administration officials said.

In the U.S., winning approval from the Republican-controlled Congress for additional clean-energy funds could prove to be a challenge. GOP lawmakers have been fierce opponents of Mr. Obama’s climate agenda, which they say will kill jobs and drive up electricity prices.

Energy Secretary Ernest Moniz expressed confidence the initiative would attract bipartisan support, saying innovation efforts have had broad backing in the past.

As the countries kick off the effort, Mr. Gates simultaneously will launch the Breakthrough Energy Coalition, a private-sector push aimed at bringing early-stage energy programs into the marketplace, administration officials said.

Earlier this year, Mr. Gates committed to invest $1 billion in clean-energy technology during the next five years, saying that mitigating climate change would also help to fight poverty.

“I think this issue is especially important because, of all the people who will be affected by climate change, those in poor countries will suffer the most,” Mr. Gates wrote this summer. “It would be a terrible injustice to let climate change undo any of the past half-century’s progress against poverty and disease—and doubly unfair because the people who will be hurt the most are the ones doing the least to cause the problem.”

Write to Colleen McCain Nelson at colleen.nelson@wsj.com

Why federal tax credit expiration would hit Midwest solar the hardest including Indiana

Posted by Laura Arnold / November 16, 2015 / Posted in Federal energy legislation, Uncategorized / No Comments

Why federal tax credit expiration would hit Midwest solar the hardest

WRITTEN BY Kari Lydersen 11/13/2015

PHOTO BY

Wayne National Forest / Creative Commons

Solar advocates nationwide are holding their breath as Congress debates extending the Investment Tax Credit (ITC) for solar, a crucial tool for financing residential and commercial installations.

Legislators who support solar are pushing to include the ITC in a broader tax extenders bill making its way through Congress.

Midwestern renewable energy developers and advocates say this region may have the most at stake with the ITC’s fate. Midwestern states typically lack strong state-level policies to support the nascent but promising solar industry, they say, and low electricity prices mean the payback time for solar is longer than in other regions.

The ITC offers credits on federal income taxes for individuals and businesses equal to 30 percent of the cost spent on solar installations. Without the extension, the commercial break will drop to 10 percent and the residential support will be eliminated when the credit expires at the end of 2016.

Without the credit, many installations would simply not be built, developers and advocates say.

“It’s crucial...it truly is a main factor for the majority of projects we win,” said Ray Davis, president of OGW Energy Resources, an Ohio-based developer that does commercial, industrial and residential solar across the Midwest. “As we are primarily a coal region, our grid kilowatt-hour costs are relatively low as compared to other regions. Therefore the ITC truly is the part of the puzzle that makes solar fiscally feasible in the Midwest.

“It’s an integral part of the decision-making,” for clients, he continued. “If we’re dealing with a business we eventually get to a CFO or controller who has a fiduciary responsibility to protect their employees and shareholders. If the system doesn’t make sense financially, they’re not going to do it.”

Legislators negotiating

The tax extenders bill passed by the Senate Finance Committee in July currently includes a two-year extension of the Production Tax Credit for wind and other renewables, which expired at the end of 2014. But the bill does not include the solar ITC.

The version of the tax extenders bill passed by the House Ways and Means Committee does not include either clean energy incentive.

Legislators have reportedly proposed an addition to the bill that would allow solar projects to collect the ITC as long as they are started, not completed, by the expiration date. There is reportedly bi-partisan support for this measure, including from Republican Sens. Dean Heller (NV) and Rob Portman (OH), and Democratic Rep. Ron Wyden (OR).

During the hearing on the bill in the Senate Finance Committee last summer, Heller said, “I'm disappointed that we can't reach consensus on language that would truly give parity for an industry that is not only important for my home state of Nevada, but frankly, helps to diversify our nation's energy portfolio.”

‘Seeing the ITC drop off a cliff would have a devastating impact on Midwest installers.’

The offices of Portman and other Midwestern legislators – Sen. Debbie Stabenow (D-Mich.), Sen. Chuck Grassley (R-Iowa) and Sen. Mark Kirk (R- Ill.) – did not return calls and emails for this story.

Meanwhile solar energy advocates are pushing for a five-year extension of the credit, through 2021, in addition to the deadline policy revision.

“Seeing the ITC drop off a cliff would have a devastating impact on Midwest installers,” said Amy Heart, senior manager of public policy for the solar developer Sunrun Inc. “Because state-level policies in the Midwest have come and gone, installers in the Midwest have really benefited from and rely on that federal solar ITC. That’s kept this market going and allowed people to keep planning for the future.”

A drastic difference

An analysis by Bloomberg News Energy Finance (BNEF), commissioned by the Solar Energy Industries Association (SEIA), found that a failure to pass the ITC extension could mean significant declines in installed solar energy in the Midwest.

For the states of Illinois, Indiana, Ohio, Missouri, Minnesota, Iowa and Ohio, BNEF predicted a cumulative 3,428 MW of solar installed by 2022 with an extension, and 2,331 MW without one. Currently, there are close to 500 MW installed in these states.

Nationwide, BNEF estimated, cumulative installed solar in 2022 would be 95 GW nationwide with an ITC extension and just 73GW without one. Utility solar installations would make up the biggest sector of that amount. On the residential front, BNEF forecast that in 2021, more than 4 GW would be built with an ITC extension, compared to 2.5GW without it.

“With the ITC expiration, we expect solar companies to downsize and retrench to their strongest states, those where they’re already established and sound state policies are already in place,” said SEIA spokesman Dan Whitten.

“This obviously leaves many consumers in Midwestern states waiting to take advantage of the benefits that solar currently provides to customers in states like California, New York and Massachusetts. This would be a major setback to the Midwest both economically and environmentally, as solar creates more jobs per megawatt than any other technology, creates zero carbon emissions and can be deployed cost-effectively and quickly.”

Hitting a cliff

Heart said that not only is an extension needed, but Congress needs to pass it quickly.

“Acting on it this fall is really important,” she said. “It expires at the end of 2016, but if we don’t have it [passed soon], sales stop in March – because [qualifying projects] have to be operational by the end of 2016.”

She added that distributors of solar equipment and solar developers are “already in crisis mode” trying to get projects completed by the end of 2016. So smaller Midwestern installations are at a competitive disadvantage compared to larger planned arrays in California or other states with well-developed solar markets.

Heart said solar advocates only want a “level playing field” with other energy sources that have long enjoyed government subsidies. And, she said, developers expect the Midwestern market could eventually reach a level where it can thrive without supports.

“As the market builds, that incentive or tax credit fades away – it’s a ramp-down, not a cliff,” she said. “An extension of a few years with a planned ramp-down – that’s absolutely up for conversation. But [the 2016 expiration would mean] the damage of 10 years of support and investment, then just when we’re getting our feet under us in the Midwest, we hit a cliff. That’s never good economic design.”

The bigger picture

Davis said the constant battle to extend the ITC for a year or two at a time “drives me crazy.”

‘If there were no subsidies associated with energy, solar would be competitive in and of itself.’

“If renewables are to be part of our country’s economic and energy future, the ITC should not be extended for a year or two, it needs to be a 10-year proposition or longer,” he said. “I really despise the kick-the-can-down-the-road mentality. If it makes sense then make it permanent, or very long-term.”

Jason Edens is co-founder of the Rural Renewable Energy Alliance (RREAL), a Minnesota-based non-profit organization that specializes in making solar accessible to lower-income customers. He notes that the ITC, like all tax credits, is a benefit mainly for more affluent companies and individuals who have income tax liabilities large enough to benefit from credits. If someone does not owe much in income taxes, they can’t really collect the 30 percent credit for a solar installation.

This is among the reasons he and others say that ultimately, a truly “level playing field” is the way to shift to a cleaner energy future.

“In an ideal world energy wouldn’t be subsidized, period,” Edens said. “If there were no subsidies associated with energy, solar would be competitive in and of itself. Coal and electric generation in general has been highly subsidized since World War II. Solar needs tools such as the ITC in order to prosper given the disparity. But if we move beyond incentives and truly internalize the environmental costs of different types of energy, it will be a slam dunk for clean energy.”

WSJ: Will Solar Energy Plummet if the Investment Tax Credit Fades Away? Yes and No

Posted by Laura Arnold / November 16, 2015 / Posted in Federal energy legislation, solar / No Comments

Will Solar Energy Plummet if the Investment Tax Credit Fades Away?

Many solar supporters say the loss or reduction of the credit will be a ‘cliff’ for the industry. But others say the credit’s impact is overstated and solar will continue to grow.

Nov. 15, 2015 10:11 p.m. ET

6 COMMENTS

What’s going to happen when a huge incentive to invest in solar power shrinks or vanishes?

At the end of next year, the 30% investment tax credit for solar and other renewable power is set to expire for residential systems and plunge to 10% for commercial installations. Boosters are calling for Congress to extend the credit in its current form.

The tax-credit crunch is looming at a time when solar is on the rise. Solar installations increased 30% last year, thanks partly to cheaper photovoltaic panels. Solar proponents note that the solar industry employs more than twice as many U.S. workers as coal mining and has added jobs 20 times faster than the rest of the economy.

Many supporters say the abrupt end date of the 30% credit represents a “cliff” for the industry. Without the current incentive, they argue, installation of solar-power systems will plummet, and thousands of jobs in the industry will be lost as a result.

Others, however, argue that the cliff isn’t as steep as it appears, and that solar will continue to grow even without the 30% credit—albeit not as quickly as before.

Amit Ronen, director of the GW Solar Institute and a professor at the Trachtenberg School of Public Policy at George Washington University, argues that the end of the 30% credit will send solar off a cliff. John Farrell, director of the Democratic Energy initiative at the Institute for Local Self-Reliance, says the impact of the tax credit is overstated and the solar market will continue to rise.

YES: The Industry Will Need Many Years to Recover

By Amit Ronen

The 30% investment tax credit is paying dividends for America. Solar is growing faster than any other domestic energy source as prices continue to plummet, even beating out coal and cheap natural gas in some markets. The solar industry created one in 78 of our country’s new jobs last year and provides living-wage salaries for more than 200,000 Americans.

But without congressional leadership, the credit will expire for consumer-owned systems and shrink for commercially owned systems at the end of 2016. When it goes, it will have a dramatic effect on the industry—and economy.

A big drop ahead

Can the solar industry survive without the current credit? Yes, but not as we know it today.

According to Energy Information Administration data, if the 30% credit is not extended, rooftop solar photovoltaic installations will plunge 94% in 2017 from a year earlier and utility-scale projects will decline 100%, with neither recovering anywhere close to today’s levels even a decade from now. Bloomberg predicts solar installations will drop by two-thirds in 2017, which the Solar Energy Industries Association estimates will cost America 100,000 jobs.

What the solar industry needs is the same as every business: certainty. The multiyear assurance provided by the eight-year, 30% credit leveraged billions in new high-tech innovation and project development, lowered risks to allow startups to launch new products and services, and resulted in tens of millions of panels installed across America.

Now installers are rushing to complete projects before 2016, with many larger projects already shelved. A multiyear credit extension would provide developers and financiers a long enough runway to stay in the game and make solar projects a comfortable investment play. Even a gradual ramping down of the credit is preferable to the economic shock embedded in current law.

Misreading the situation

Some take a more optimistic view of the days ahead, saying the estimates I’ve cited are far too severe. But the numbers come from three of the leading prognosticators of solar-industry growth rates, relying on extensive data, surveys and expert interviews. They are the best estimates we’ve got.

The argument that financiers, not developers, grab about half of the tax credit anyway, so the loss of the incentive won’t hurt that much, also doesn’t match real-world practices. The credit has proved an essential financing mechanism to getting solar built, even though some projects rely on complex tax-equity markets to monetize the credit.

The logic behind the optimists’ argument is that middlemen, not developers, grab about half of the tax credit anyway, so the loss of the incentive won’t hurt that much. The problem is that most estimates say middlemen capture a much lower percentage than half; some put it below 10%. Obviously, that’s a much more significant hit for developers to face.

Optimists also speculate that it will get easier for people to finance solar systems themselves with loans if the credit goes away. The residential solar market is shifting to

more self-financing, but rising prices in the absence of the credit could make solar uneconomical and scare off buyers. The lack of a credit will also make it harder for utility-scale projects, which account for most solar investment dollars, to compete for scarce capital and against more carbon-intensive generation alternatives.

The tax credit has been a solid investment for America, which shouldn’t be abandoned abruptly or prematurely. If our goal is to diversify and decarbonize our nation’s energy portfolio, why would we eliminate the credit before removing billions of dollars of subsidies for fossil fuels? If our goal is to provide more consumer choice and lower electricity bills, why would we want to cut off the credit just as it is starting to benefit America and its households?

If our goal is to create tens of thousands of new jobs, the 30% credit should not be allowed to expire just yet. It’s simply working too well.

Mr. Ronen is director of the GW Solar Institute and a professor at the Trachtenberg School of Public Policy at George Washington University. He can be reached at reports@wsj.com.

NO: Grim Forecasts Overstate the Drop For Several Reasons

By John Farrell

The approaching expiration of the 30% federal tax credit for solar energy has created talk of a cliff that will put a hard end to solar’s recent and rapid growth.

In fact, the abrupt fall may remove several barriers and allow the solar market to continue its rise.

I don’t have a problem with subsidizing solar power, a socially useful activity. But it’s clear that solar can survive—and thrive—without the investment tax credit for consumers and a lessened one for commercially owned systems. A study from Bloomberg estimates that the loss of the tax credit will cause solar capacity to only quadruple, instead of quintuple, by 2022—still a substantial increase. Our own analysis reinforces this assessment: In 22 states, at least one gigawatt of solar (and often much more) could be installed at a comparable cost to retail electricity prices by 2017, tax credit not included.

So why are the grimmer predictions about the future of solar incorrect? For starters, the cliff that people talk about is smaller than it appears. Most folks with solar on their rooftop used a third-party lease or power-purchase contract. That third party took on much of the financial risk and the responsibility for redeeming the 30% tax credit. These financial middlemen have absorbed nearly half of the tax credit, and as a result, solar developers and customers have received an effective discount of 15% instead of 30%. So the current incentive isn’t as big as it looks, and the effect of losing the incentive won’t be as severe as many think.

Another factor behind the dire predictions: There’s been a surge in development to secure the tax credit by the end of 2016, artificially inflating the 2016 numbers with projects that otherwise would have been completed in 2017. That means that the percentage decline after 2016 looks worse than it actually is. Meanwhile, some sources that are making downbeat predictions have consistently underestimated the development of solar and other renewable energy.

What loss of certainty?

Pessimists also say that businesses and investors demand the certainty that the credit provides. But one could argue that the change in the tax credit at the end of 2016 is certainty—it has been in statute since 2008.

What’s more, the change to the tax credit will open up new options for financing. Solar energy’s low risk and steady returns are attracting new investors whose profit expectations are much lower than those of Wall Street financiers. One company has already offered the first solar securitization, packaging its solar leases into vehicles for institutional investors.

If the change in the tax credit opens the door to more sizable, low-margin investors that offer a discounted cost of debt and equity for solar projects, we estimate that the net cost of solar would rise just 2.5% with the loss of the tax credit.

New ways to finance

The change to the credit may also drive prospective solar clients, with decent credit, from leasing to lower-cost self-financing. With less paperwork to file, the relatively lower costs and higher returns of ownership become more evident.

A November 2014 pro forma analysis by the National Renewable Energy Laboratory suggests that self-financing lowers the cost of solar by 23% for residential customers and 87% for commercial customers.

It’s easy to assume that losing the federal tax credit is nothing but a 30% cut in the growth potential for solar energy. But this ignores several countervailing forces, from the middlemen’s current cut to falling costs to the advent of low-cost financing. Even though coal and gas retain subsidies like heavily socialized pollution costs, solar doesn’t need the federal tax incentive to compete. Instead, the market provides several ways to glide over the solar tax cliff.

Mr. Farrell is director of the Democratic Energy initiative at the Institute for Local Self-Reliance. He can be reached at reports@wsj.com.