Solar-energy advocates try to muster support in Congress for energy tax credit increase
Gloucester, Mass. — The stream of traffic along Route 127 past the Captain's Lodge motel here is a little gentler this leaden autumn day than it was during the height of the summer tourist season. The wooden sign out in front of the lodge says ''vacancy.''
But the 29 flat-plate solar collectors perched at various angles atop the modest gray buildings of New England's first solar motel are doing their job.
Because of their extensive roof areas and their heavy use of hot water, motels are considered some of the likeliest candidates for -solar-energy installations among small businesses.
But solar-energy advocates are concerned that unless the current federal tax credits are increased and extended, small businesses may find themselves locked into conventional energy systems.
Quickly punching a few buttons on the control panel behind the restaurant at the Captain's Lodge, owner Alan Hagstrom calls up a bright red readout. It shows that city water is coming in at 67 degrees F.; the glycol ''antifreeze'' solution in the collectors is 94 degrees. The glycol is run through a heat exchanger, which warms city water to 86 degrees. The water still must be brought up to 120 degrees before being piped into the guest rooms, but the solar system obviously shoulders much of the heating burden.
''It's hard to get a really clean figure for how much the system saves, since our gas and electric meters meter other things than just hot water. But we estimate 15 percent savings a year,'' Mr. Hagstrom says.
Solar hot-water heating is especially effective at the Captain's Lodge because the season of peak demand - summer - is also the time when the system operates at peak efficiency. Under the summer sun the glycol solution heats up to 170 degrees, and motel guests need to open the hot-water tap only a crack for their showers. ''I thought we might have problems with people scalding themselves,'' Hagstrom says. ''It hasn't happened, though.''
The blue-jeaned and flannel-shirted Hagstrom is obviously pleased with the system, installed in the spring of 1981 for $37,500.
''Eventually it's going to pay for itself - unless it blows up or something, '' he says with a chuckle to indicate how unlikely he thinks that will be.
But he doesn't go overboard in his enthusiasm. People shouldn't get into solar for instant savings, he says. ''If they're in it for a buck, it's not going to work.''
Not every small-business owner has that kind of commitment to solar energy, though. That's why solar advocates see the federal solar-energy tax credits as crucial if solar is to compete effectively in the energy marketplace. The problem, they say, is that users of conventional systems can deduct fuel costs as a business expense; solar, on the other hand, involves a major up-front capital expense, offset over time by the virtual lack of operating cost.
Solar interests are pushing to extend the credits, now due to expire at the end of 1985. They also are trying to get the credit for businesses increased from 15 percent to 20 percent. (The residential credit is 40 percent; in some but not all cases, installing solar equipment can give businesses an additional 10 percent investment tax credit.)
''The 15 percent credit doesn't offset the expensing of fuels,'' says Allan Howe, director of government relations for the Solar Energy Industries Association in Washington. With the smaller credit, small businesses can't justify that capital expense.
Solar advocates argue that increase of the tax credit - 20 percent is the figure most proponents are pushing - would only put solar on the same footing as conventional systems, whose cost to the consumer, the solar people say, is subsidized. ''We're asking for a tax credit comparable to the fuel-depletion allowance and other credits,'' Mr. Howesays.
Tax credit bills are pending in both houses of Congress, but they could have an uphill battle, particularly in the House Ways and Means Committee, says Jerry Yudelson of Solar Initiative, a consulting firm in Oakland, Calif.
''The Senate has generally been more liberal on these tax credits than the House,'' a Ways and Means staff member observes. ''The House wants to let the free market determine whether these things are viable, and, of course, with the kind of deficits we've been having, anything that costs money is being looked at closely.''
Like a sapling stunted by a series of harsh winters, the solar industry isn't quite where advocates had expected it to be at this point because of recession over the past few years, and because of the relatively stable energy prices seen once the reverberations of the 1979 oil shock subsided. That's part of the reason an extension of the credits is seen as necessary.
''Recession has hit the industry pretty hard over the past year and a half or two. Sales have been down, although that's turning around now,'' Howe says.
It's hard to track just how extensive small-business applications of solar energy are, says Carlo LaPorta, a consultant to the Solar Energy Industries Association in Washington. ''Market research on solar energy stopped when the Reagan administration came in.''
But, says Mr. Yudelson, ''Solar energy has always been a small-business thing , both for the suppliers and the customers. There aren't any big companies in it , except for some of the major oil companies.''
In any case, roughly 80 percent of the market for flat-plate collectors goes for residential water-heating systems, Mr. LaPorta says. The other 20 percent is divided among residential space heating systems, and all commercial and industrial systems.
For larger businesses, the availability of third-party leasing may make the difference on the solar-or-not-solar question. It works like this: A contractor gathers investors to buy solar equipment, which is then leased to a business. The business then gets the savings of solar without having to make the capital expenditure, and the investors have a nice tax shelter.
''This is a good deal, but it's not for really small businesses,'' says Kevin Finneran of the Solar Lobby in Washington. ''It's worked for apartment houses, chains of laundromats, things like that.''