WASHINGTON--The last time tax incentives for renewable-energy projects dried up in the 1980s, energy investor Nancy Floyd got out of the wind business--something she fears other entrepreneurs may do without quick changes to U.S. policy.
Floyd, now the managing director of energy technology venture capital firm Nth Power, was one of a group of businesspeople who held a press conference here to lobby for the renewal of federal tax incentives set to expire this year.
The incentives, which provide a federal tax credit for renewable-energy investment, are set to expire at the end of 2008. But the impact is already being felt, said Kevin Walsh, the head of GE's renewable-energy financing division.
"We are already having a tightening of capital right now with the credit crunch. Add on to that the uncertainty in policy and you're scaring capital away," Walsh said.
Some of that capital will go outside the U.S. Because of policies, the first three U.S.-based solar companies to go public used that money to build manufacturing facilities elsewhere to serve those markets, noted Floyd.
Wind, one of the fastest growing energy businesses, will be hardest hit, said John Cavalier, vice chairman at Credit Suisse who heads up the bank's renewable-energy business.
"We'll see an exit from wind deals as early as May of this year," Cavalier said. "We'll probably see a complete moratorium of the great promise of renewable energy."
Solar power plant projects have already been postponed for months, said Christopher Huntington, vice president of business development at solar company SkyFuel.
The House last week passed a bill which would extend the renewable-energy tax credit, which would be paid for by rescinding a tax break extended to oil and gas companies.
But that technique, which has failed to pass the Senate twice before, is unlikely to work, said Marchant Wentworth, Washington representative for clean energy at the Union of Concerned Scientists, an advocacy group.
The issue has become a political contest between Democrats and Republicans, which has made the tax credit a "political hostage."
The other problem is that some senators are focused on increasing fuel production of all sorts, but do not recognize the economic development of the renewable-energy industry, including job creation, Wentworth said.
Dan Reicher, director of climate change and energy initiatives at Google.org, said that there are long-term effects of a continued on again-off again renewable-energy policy.
"We believe we are at the dawn of a green energy revolution potentially as powerful as the Internet revolution," said Reicher who was former U.S. Assistant Secretary of Energy for Energy Efficiency and Renewable Energy. "Policy makers can make or break this revolution."