Governor cites a lack of funding source to offset tax credits
For the second year in a row, Gov. Andrew Cuomo has vetoed legislation that would have provided tax credits for New York residents who install residential geothermal energy systems.
The bill S.6249/A.9925 would have provided New Yorkers a tax credit for 25 percent of the costs associated with installing an energy-efficient geothermal system, up to $5,000.
Like last year, the legislation unanimously passed both the Senate and Assembly only to be vetoed by Cuomo because it does not identify a designated source of funding to offset the proposed tax credits.
Bill S.6249/A.09925 sought to bring the state’s tax incentives for geothermal energy production up to the same standards as solar. There is currently a federal incentive for geothermal systems set to expire at the end of this calendar year.
The solar industry in New York has been booming over the last five years. In New York City, solar projects have increased nearly 3,000 percent. SolarCity is building a massive, state-of-the-art facility in Buffalo to produce solar panels for domestic customers, creating more than 1,500 skilled jobs. Solar has been so successful primarily because the tax incentives enabled business of all sizes to compete in a brand-new market.
Much like solar, geothermal taps into energy that is cheap and plentiful. Geothermal utilizes the ambient temperature of the earth to provide completely clean energy. A system can typically pay for itself after 15 years of use, not counting any potential tax credits. They do have their downsides though: excavation is required and not every home is a suitable candidate.
Residential geothermal systems work by coupling the home’s heating and cooling with the earth. Heat-pumps move water throughout the system: from the home, through a subterranean lattice-work of pipes, and back through the home. As the water moves through the pipes underground, it becomes closer to the temperature of the earth, effectively cooling the home in summer and warming it in winter.
Senator Robert Ortt and Assemblyman Sean Ryan have been pushing for this legislation for the past two years. They both represent the Buffalo region of New York, home of the SolarCity factory.
“Utilizing natural, renewable energy benefits all New Yorkers. This legislation is a common sense, bipartisan approach that will pay dividends across our region by reducing our carbon footprint for future generations and investing in and creating good local jobs,” Senator Robert Ortt said during an October 6 event promoting the bill in Rochester. “With geothermal solutions, we’re also helping to lower energy costs for hard-working families and small businesses.”
Cuomo does support the expansion of geothermal and other renewable energy sources in New York, but was unable to pass this bill due to there being no means to offset the projected lost tax revenue from the incentives.
“This bill suffers from the same fundamental flaw as the bill I vetoed last year — it does not identify a designated source of funding to offset the significant cost of providing a tax credit for the installation of qualified geothermal energy system expenditures,” Cuomo wrote in his November 28 veto message.
Cuomo noted that the New York State Energy Research and Development Authority will be installing and monitoring 40 geothermal systems on Long Island, in addition to 50 other sites across the state. The New York Power Authority is currently developing a program to install geothermal on state buildings and campuses.
“While I am constrained to veto this bill, I encourage the Legislature to work with me to promote these initiatives, including through annual budget negotiations, to encourage the growth and use of geothermal energy throughout the state,” Cuomo said.