The massive U.S. financial bailout plan, signed into law Friday afternoon, renews existing tax credits for renewable energy and includes rebates for plug-in hybrid drivers.
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.
Suppliers in the renewable-energy industry have tried just about everything to pass a law to renew an important investment tax credit that is set to expire at the end of this year.
On Thursday, Sens. Mary Cantwell (D-Wash.) and Senator John Ensign (R-Nev.) introduced a bill that would extend that credit and provide incentives for energy-efficiency measures.
The Clean Energy Tax Stimulus Act of 2008 ( click here for PDF) extends the investment tax credit for eight more years for businesses.
Consumers would have the existing 30 percent federal tax credit on renewable energy projects, such as solar panels, extended another year and the $2,000 cap removed.
The bill doesn't detail how the tax credits would be paid for, which is a crucial question.
Previous proposals attempted to pay for the renewed tax credit by rescinding existing tax breaks on oil companies. Those proposals were defeated in the Senate and were threatened by a White House veto at the end of last year.
For several months, executives in the solar and wind industries have been complaining that the lack of policy certainty is stalling the U.S. clean energy industry. In particular, large industrial investments, such as utility-scale wind and solar plants, are being pushed back or scrapped, according to people in the industry.
The Solar Energy Industries Association put out a statement on Thursday applauding the move.
Heavy hitters in the renewable-energy business have scheduled a press conference on Tuesday to publicly lobby for long-sought policies, arguing that the industry and U.S. competitiveness are at risk.
The American Council on Renewable Energy (ACORE) organized the press conference, which will include well-known energy investors and business people from General Electric, Credit Suisse, Google, and clean-tech venture capital firm Nth Power. It will be held at the Washington International Renewable Energy Conference (WIREC), which is hosted by the U.S. government.
The renewable-energy industry has been thwarted at least two times in efforts to renew an existing federal tax credit for renewable-energy projects that is set to expire at the end of 2008. Projects include solar energy, wind, biofuels, and other renewable sources.
And at this point, industrialists appear to be getting downright irate over the prospect of that tax credit lapsing.
Why? Because they are losing money.
ACORE sent a letter to Congress, signed by 500 "industry leaders," calculating that 42 gigawatts of renewable-energy projects are in jeopardy because of the uncertainty around the investment tax credit and another production tax credit. That's enough power for 16 million homes.
If the industry isn't developed, "green collar" jobs will go to other countries, and American consumers may end up importing more renewable-energy products than they already do, ACORE argues.
Called in to make a public case for renewing the investment tax credit and production tax credit at the press conference are: Credit Suisse Vice Chairman John Cavalier; energy venture capitalist Nancy Floyd from Nth Power; the head of GE's renewable-energy financing division, Kevin Walsh; former California Energy Commissioner John Geesman; and Dan Reicher, director of climate change and energy initiatives at Google.org, who is also co-chair of ACORE.
But for all the high-powered pressure, prospects are not looking very good.
The House earlier this month passed another bill which, like previous attempts, proposes paying for the tax credit by closing an existing tax incentive on oil and gas companies. The Senate has twice failed to pass the measure, and President Bush threatened to veto such a measure late last year.
Even the head of the Solar Energy Industry Association of America, Rhone Resch, predicted that paying for tax incentives by trying to pull back oil company tax breaks is unlikely to succeed.
In an interview with VentureBeat, Nanosolar CEO Martin Roscheisen called the policy uncertainty "really embarrassing."
At an investor conference last month, Resch said that the solar industry is trying to create a coalition of utilities, homebuilders, and environmentalists to get a long-term set of financial rules in place. Worst case scenario is to try to get a one-year extension at the end of this year, he said.
Meanwhile, President Bush is scheduled to address WIREC conference attendees on Wednesday morning.
The president signed an energy bill with large incentives for the production of biofuels, but at this point it's unlikely he'll have good news for renewable-power backers.
An economic stimulus plan passed the Senate on Thursday without extending an important tax credit for the solar and wind industries.
Renewable energy companies and advocates were bitterly disappointed late last year with the passage of the Energy Act, which did not extend an investment tax credit. It would have been funded by repealing an existing tax break to oil companies.
Right now, renewable energy projects receive a federal tax credit once they are completed, but that provision runs out at the end of 2008.
On Thursday, the Senate again left out the tax credit extension, which solar and wind business people say is important to the stability and growth of the renewable energy industry.
"It is crucial for Congress to return to work to pass an eight-year investment tax credit for America's solar energy industry. Investing in America's solar future costs little and will keep the power on in homes and businesses in all 50 states," Rhone Resche, president of the Solar Energy Industries Association, said in a statement.
The SEIA said that it will pursue other opportunities to extend the tax credit this year.
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