Tax Policy Eases Life for a Big Easy Solar Startup

Julian Thomas was pursuing a master’s degree in Barcelona when a professor introduced him to the business of solar energy. An Alabama native, he returned to the South and took a solar training class in Louisiana. In 2009 he co-founded Joule, a New Orleans-based solar energy company that helps home and business owners install solar panels and LED lighting. He spoke to Techonomy about startups in New Orleans, the impact of public policy on the solar industry, and the future of solar energy.
Why did you choose to open up shop in New Orleans?
Since 2008, Louisiana has had a state tax credit for solar energy systems, a credit up to an individual or business’s liability which is then refunded. That represents about 50% of the total install costs of the system. So when you couple that with federal tax credit, about 80% of the system is paid for through tax credits. New Orleans has the densest and most affluent concentration of wealth in the state. Residential solar is a high-priced product, so the ability to sell into a market is going to be a function of the ability of the participants to afford it.
It’s been ten years since Hurricane Katrina. How is New Orleans doing now?
From an economic standpoint, it’s never been stronger. It benefitted tremendously 18 months after Katrina, when there was a substantial influx of financial assistance from FEMA. That allowed businesses to avoid a lot of the economic downturn that a lot of the other parts of the country had faced in 2009, there was a ton of rebuilding that was still happening at that point.
Are there a lot of startups in New Orleans?
There’s a ton of young companies. Two things are responsible for that: there’s a digital media tax credit, and there’s also an angel tax credit, both of which have allowed Internet-based companies, in particular, to offset a lot of their startup costs.
There’s been a lot of discussion about diversity in hiring. New Orleans is 60% African-American. Do you think the city’s startup scene reflects its racial demographics?
My sense is that it’s not representative of the makeup of the city. I would say that our company is significantly more diverse than your average tech startup in New Orleans.
Diversity is incredibly important. You make good business decisions as a function of your employees, and if you are surrounding yourself with people who think exactly like you do and have the exact same background and set of experiences, you’re going to be missing out on important viewpoints that most likely will lead you to a more informed decision.
Is most of your business in Louisiana?
We’re licensed in Mississippi and Alabama, but it’s just a small amount of work. In Mississippi, that should increase dramatically if the regulation that’s working its way to the public service commissions continues on the path that it is. Alabama is probably a little farther off. But the bulk of our work is in Louisiana.
Are you worried about having so much of your strategy being tied to particular public policy outcomes?
Anybody in solar is tied to that. I’m involved in a lot of policy work, at any point in the year it represents up to 80% of my time. We have another division we started, so we could get a little bit isolated from policy, since you can’t really control policy. You can try to help reform it or shape it, but there’s no ability for you to directly make it go one way or the other. So we started a division about 18 months ago that focuses on LED retrofits. That gives us less reliance on policy outcomes.
Where do you see the future of solar energy?
I think the growth of solar is going to be largely dependent on the cost of storage—batteries. So right now one of the primary economic motivators for someone to go and invest in a solar system is the ability to receive credit from the utility for electricity that’s pushed back to the grid.
Storage allows a consumer to not be reliant on selling electricity back to the grid. Everything ends up behind the meter. Excess electricity, instead of getting pushed back to the grid, goes into a battery bank, where it’s kept until there isn’t production—if it’s dark, or rainy, or there are excessive loads in the house, at which point it’s pushed back into the home. Right now, the cost of batteries—absent of some very limited incentives across the country—is just too high. The return on investing in that system is not rapid enough to motivate people to make that investment.
Joule is among the companies currently hosting fellows from Venture for America, whose annual City as a Startup conference will immediately follow this year’s Techonomy Detroit.