Clouds are forming over solar tax credits. With state and local governments probing for more revenue, tax credits for renewable energy devices may be in for some scrutiny. To encourage development of alternative energy sources in the late '70s, the federal government offered credits of up to 40 percent on solar devices. And many state governments followed with even larger percentage credits.
But solar devices have been slow to produce major changes in energy production, especially in the home installation field. Many have been installed as auxiliary units rather than as the main replacement for oil or electricity. In California, for example, 63 percent of the solar tax credits in one year resulted from their use for swimming pools.
The State of California has indicated that the 55 percent state credit for cost of solar devices and installations may be dropped from certain future state budgets.