Representatives from the wind and solar industries have lobbied for months to extend the credits to ensure continued growth. Without the supports in place, they warned business would stall, resulting in thousands of lost jobs.
In addition to the renewable energy "extenders," the law boosts subsidies to invest in non-conventional fossil fuels--so-called dirty fuels, such as making liquid fuel from coal or sand and rock. Also included are breaks to develop technologies to burn coal more cleanly and to sequester carbon dioxide emissions from coal plants underground.
Important to the clean-tech industry is $800 million in available bonds for renewable energy generation facilities from renewable sources, such as biomass and geothermal.
The biggest impact in renewable energy will be in solar, for both residential customers and larger businesses. For solar, the law:
Extends for eight years the 30 percent tax credit for solar residential and commercial solar installations.
Eliminates the $2,000 cap on that tax credit for solar electric panels installed after the end of this year.
Allows utilities to benefit from these tax credits.
These changes make solar a far more attractive investment, particularly for consumers in states with good sun and supportive state policies.
Research firm New Energy Finance, in a note to clients on Saturday, said that the payback time for a typical solar panel installation will go from from 10 years to 7 years in California and from 15 years to 12 years in Florida.
Wind industry subsidies, called a production tax credit, were extended for one year, a policy which doesn't disrupt ongoing wind projects but falls short of the long-term footing the industry was seeking.
New Energy Finance called the wind power extension a "good patch" but not enough to spur manufacturers to expand capacity.
The existing production tax credit for large-scale geothermal and biomass projects were extended for two years.
For small wind turbines under 100 kilowatts, the federal government will now give a tax credit of up to $4,000 for the next eight years.
Residential geothermal heat pumps have a $2,000 tax credit. And credits for marine power systems were extended eight years as well.
In a statement, Rhone Resch, the president of the Solar Energy Industry Association (SEIA), said that "this bill is a major step in our long journey toward energy independence and ensures that solar energy will be a significant part of America's energy future."
He said that by 2016, solar energy will be the least expensive source of electricity for consumers.
"By passing this bill, Congress has finally given the solar energy industry 'policy certainty' that will attract investment, expand manufacturing, and lower the cost of solar energy to consumers," Roger Efird, SEIA chairman and president of Suntech America, said in a statement.
Similarly, the American Wind Energy Association on Friday put out a statement lauding politicians for maintaining a policy in place. Previous, renewable energy tax credits have lapsed and delayed growth of the industry.
Transportation and efficiency
The law will give drivers of plug-in hybrid vehicles a tax credit between $2,500 and $7,500, depending on the capacity of the battery. Larger vehicles, such as trucks, have larger credits.
"The new tax credits for plug-in cars are higher than either presidential candidate has proposed. Now automakers and car buyers will no longer see higher up-front costs as a showstopper," Felix Kramer, founder, the California Cars Initiative, said in a statement. "And with this legislation, we'll also get more wind and solar energy that will make plug-in cars drive cleaner every year they're on the road."
Also in the fuels arena, the law extends the alternative fuels tax credits and extends for one year the existing $1 per gallon credit for biodiesel and renewable diesel production. That's good news for biodiesel producers, some of which are struggling because of rising feedstock prices.
Energy efficiency gets a nod as well with measures, such as rebates for appliances and bonds available to building operators that decrease building energy usage by 20 percent.
"Overall, the legislation's passage represents good news for clean energy projects and firms which, like the rest of the economy, rely on access to capital from banks and other financial institutions," New Energy Finance said in its note.
Updated on October 4 6:30 a.m. PDT with more details and analyst comments.