To all the other hassles faced by solar companies installing utility-sized projects in the desert, you can now add attempted shakedowns by local politicians.
The shakedown could destroy the investment momentum of such companies as First Solar (FSLR), which supply solar panels and systems, as well as utilities that buy such power like Edison International (EIX). Until the shakedown problem is resolved, every company in this market is a riskier investment.
And not just in California. Because this shakedown could happen anywhere a local government sees a coming renewable project as a cash cow.
John Benoit, who made his reputation in the California legislature as an anti-tax Republican, has proposed a 2% “franchise fee” on new solar installations in Riverside County, which could scuttle utility-scale systems in the Coachella Desert.
Benoit, a former highway patrol commander, has never before found a tax he approved of, but now calls the fee necessary because otherwise “we'll get virtually nothing for it." Comments from citizens on the Benoit proposal were mostly favorable to the idea .
Two solar projects in Riverside now awaiting final approvals, which might not go forward if the fee is imposed, represent about 1,000 construction jobs between them.
First Solar calls Benoit's proposal a “Sun Tax” and says it could hinder financing of large solar projects. First Solar said that it needs to get its “fast track” approval from the Department of Energy by September 30 or the project can't go forward, and that the proposed tax would make the whole project uneconomic.
The Benoit proposal could put a chilling effect on all large-scale solar development nationwide. After going through a laborious process of federal and state approvals, builders and utilities are not going to be happy if local officials can, at the last minute, hold them up for taxes.