Solar tax credit renewals get green light from Senate

Hopes for renewable energy may not be a pipe dream after all.

After nearly a year of squabbling, the U.S. Senate voted Tuesday to extend solar tax credits for the next eight years and also remove the $2,000 cap on residential projects.

(Credit: CNET News)

What with all the political bickering, I was betting this wouldn't ever get done before the November elections. But the hired help in Washington provided a pleasant surprise for a change. The bill, which includes an allowance for utilities to make use of the commercial credit, now goes to the House of Representatives for approval before everyone clears out of town next week. The current tax credit was set to expire at year's end.

Doubtless there will be some ready to dun the agreement as yet another handout to an interest group. On the surface, that's true. But after the government's recent series of bailouts including--drum roll, please--Bear Stearns, Freddie Mac, Fannie Mae, AIG, and the $700 billion or so the Treasury Department wants to buy illiquid mortgage-linked securities--this one should mollify the critics, according to Barry Cinnamon, CEO of Akeena Solar.

"I don't think anybody is going to look at $17 billion over 10 years going to renewable energy as a handout when you put it in the perspective of $1 trillion going to failed banks in a one-year period," said Cinnamon. He added that while he did hear the handout argument a couple of years ago, he's not encountering that line of argument, what with crude oil prices hovering north of $100 a barrel.

Cinnamon and other solar industry executives have argued that the industry is still too young and too fragile to be weaned off the investment tax credit (ITC) just yet. Solar energy lobbyists released a study by Navigant Consulting claiming that 440,000 permanent jobs and $232 billion in investment would be supported by 2016 with an eight-year extension of the ITC.

However, that argument wasn't persuading enough Senators to pledge their support to the investment tax extension. In fact, when Congress passed the 2007 energy bill, the solar industry got shut out. The ongoing debate had a lot to do with accounting. While Democrats wanted to pay for them by taking away tax credits from the oil industry, the Republicans held firm.

A couple of recent developments helped break the logjam. One was the willingness of congressional Democrats to go along with an offshore-drilling proposal. The other was a statement from the White House that it would not oppose extending the tax credits.

"The great thing about this bill is that it's going to allow people throughout the country to benefit," said Cinnamon. "It will be as much for people in Peoria as it will be for people living in Pleasanton."

[yacahuma]

Let me be the first one to say thanks to the republicans in the US, for all they have done to kill our mother earth. Thank you republicans.

[Penguinisto]

@yacahuma: Sorry kid, but both parties will happily p!ss in your baby's milk-bottle for the right amount of lobbyist 'donation' money.

@ The author: Cool beans :)

[jemiller0]

The Republicans are far worse. They are in the pocket of big oil. All they care about is making money and now the chickens are coming home to roost.

[Endbringer]

Blaming Republicans for "killing mother earth" is ridiculous and just makes you look ignorant.

As for the article, if the solar industry has to have special tax breaks in order to be viable, then the industry is not worth it. If it can't work on its own without government handouts, then shouldn't that tell you that the industry is not worth it? Successful people / industries are successful because they bring a product that is wanted and / or needed. If there is so much incentive and need to have everything go "green", then why can't the solar industry survive on its own like most every other industry?

[Xiibo]

Wow... Then I guess everyone should stop growing food. Farming is one of the most subsidized industries in America.

[regulator1956]

Why do the Big Oil companies still get government handouts??

I guess they can't afford to look for oil without taxpayer help.

[Endbringer]

The farming subsidies should stop. The government is artificially raising the price of corn and such because of their subsidies. They are actually paying landowners / farmers to NOT grow crops because the supply would increase, therefore decreasing the price. The only ones who get those subsidies are the huge farming companies, not ma & pa farmer. There is no shortage of food stock, in fact, there is too much, which is why the government pays people not to farm.

As for "Big Oil", think about it. Everyone complains they make too much money. My mutual fund and most every pension plan invests in these companies. Their money is going to help me retire since the government is stealing my social security money for other pet projects. As to handouts for the oil industry, Exxon paid $32.36 BILLION in taxes for 2007. That is $32,360,000,000. That is just one company and does not include the federal gas tax we all pay. Now you tell me if they are getting the handouts or is it the government?

[willdryden]

Endbringer, my uncle farms rice and used part of the $20,000 he got to help pay his help. 3 guys, 100 acres, 40 under production. Don't say all the money goes to large corps.

[b1gf00t]

***?!?!? As in $5Billion in perpetual tax credits to the Oil companies? OK, so maybe I agree with your logic then. You're right, let's do away with all tax concessions to all oil companies, charge-back for use of the military to stabilize fossil-rich reasons, charge back for every mis-use and abuse of the surrounding environment (such as getting XOM to pay the $9.6B that they still owe in reparations for the Valdez spill almost 20 years ago), then watch the pump prices go to a natural state (see: every other civilized country in the world) of $10-11 per gallon. Then, watch consumption go down, conservation and efficiency go up, public transit projects thrive, inadequate (see: neglected, if not collapsing) bridges and roads not be such a severe issue, and a natural progression towards renewable and sustainable energies. Scientists say the Sun has over 5.5 Billion years of life remaining when NO scientist has even hinted at anything close to even 300 years of fossil fuels remaining. In case you haven't realized, I say that your idea is either very extremely progressive as my (mostly cynical) ideas suggest as very remotely viable possibilities or very ridiculous on the basis that a 100+ year old industry still receives concessions from the taxpayer both on April 15th and every day at the pump, grocery, and anywhere goods and services are paid for. So, that for at least a hundred years, budding industries and start-ups are "protected" with tax subsidies until such time that they can thrive on their own, but all of a sudden, renewables aren't viable if they can't stand alone against the huge oil mega-conglomerates? Try again on a more formidable argument. I respectfully submit that without millions of years of solar thermal energy, there would be no fossil fuels. In essence, we cannot afford to wait for fossil supplies to restock over the next few million years. Time to take a few unnecessary energy conversions out of the picture and begin using solar directly and not indirectly through oil, gas, and coal. It will initially take an investment of a governmental proportion (the ever-so evil taxes) to get to a point where renewables are the rule and fossils the exception. Ever stop to think about each and every dollar you pay to your mortgage lender in interest, for which you're elated to receive a token 15-33 cents back from Uncle Sam! So, if I stopped you on the street and offered you 33 cents would you give me a dollar? And, so many of us want to vilify a dollar of taxes but never stop to look at the other much greater wastes in our daily lives. The point is that we can do some incredible things, solve some enormous issues, and build a better future for our loved ones, collectively with wise spending of our tax dollars, but again, you could never hold that mortgage lender to the same high standards. Unfortunately, we've all held government to such a low standard and need to take it back from the corporate-funded lobbyists so that we have real choice again. Renewables are as much about freedom and liberty as they are about energy and technology. So, please think a little deeper before the next time you try to bash a budding industry that offers so much promise!

[Penguinisto]

Actually, the solar industry, if a corp in it is run right, can grow just fine with or without 'em (disclaimer - I work for a member of that industry). There are new processes coming online that are likely to nearly double the per-cell conversion efficiency (from ~18% to ~30%).

The big hurdle for years has been cheap oil. Now that Oil sells for at or around triple-digits per-barrel, it makes financial sense to get some Solar (or wind, or etc.) energy going. Before now, only hydro in limited circumstances was worth the costs - and even then only with huge initial gov't investments. Now it is just as cheap to install solar panels or wind turbines.

The market is pretty much taking care of itself in that way.

That said, the tax credits aren't handouts - tax credits are incentives (and tax cuts generally stimulate economic growth - which is why both parties are advertising them to the rafters this year, no?)

PS: The very first conservationist president (Theodore Roosevelt) was a Republican. ;) Nowadays, both parties will loudly proclaim to "care", but BOTH parties are instead interested in only two things: Power, and Wealth.

[globalist_agenda]

"I don't think anybody is going to look at $17 billion over 10 years going to renewable energy as a handout when you put it in the perspective of $1 trillion going to failed banks in a one-year period"

It's that kind of thinking that got us $9 trillion in debt. Every program and project costs a minimum of $1 billion. Doing a study about a study costs $1 billion. Oh, it's not REAL money. It's just debt.

[Manhattan2]

Great news! or is it? Let us be the first to say. "Putting photovoltaic panels on rooftops is not the answer" Should tax payers have to subsidize someone making a mistake? Please tell us how the incentive works. If I pay $6000 to have solar cells installed on my roof do I automatically get $2000 back at the end of the year? Or is it upfront savings? Is it dependent on the installed watt capability of my system or just dollars? Is it dependent on the energy production (capture) of my system or just dollars? Please email the answers to [e-mail] and post here. Thanks

[willdryden]

Go away. you post on every article and your produce is still 2 years from use.

[Endbringer]

The incentive works by the government giving tax breaks to companies that do solar and other alternative energy projects. The end user does not get anything other than a costly installation of something whose ROI is many years later. The return you get is over the long haul of lowered power consumption at your home / business. The problem is that ROI can be many years after the panels are installed. What happens when the return on investment is longer than the lifespan of the panels? You have to repair and / or install new ones, so there is the possibility of actually losing money. But hey, it makes you feel better, though, right?

[willdryden]

The existing credit is for the end user. Yes, this could cause the price to stay higher, but still helps the people who are forward thinking enough to install the system in the first place.

[shanedr]

There is absolutely no need for tax credits for the oil industry. The oil industries profits are the envy of the business world, giving them tax credits is a punch in the gut to every taxpayer.

[Endbringer]

You do know that the difference between profit and profit-margin, right? The profit-margin for the oil industry is average or even below-average at 8%. Then take a look at industries like the software industry and see how their profit-margins are in the teens and sometimes over 20%.

The real solution would be to implement the FairTax. There would be none of these types of bail-outs or unequal incentives. Our economy would boom like nothing before if the FairTax was passed.