WASHINGTON, D.C., USA, October 6, 2008. Solar is the big winner after the US Congress passed the tax credits extensions for renewable energy generation on Friday 3 October as part of the Emergency Economic Stabilization Act of 2008.
Solar saw its Investment Tax Credits (ITC) extended by eight years and the lifting of the US$2,000 cap on residential installation tax credits, whereas the wind industry only received a one year extension of its Production Tax Credit (PTC).
An authorisation of US$800 million for clean energy bonds for renewable energy generating facilities was also included in the Bill. Michael Liebreich, Chairman and Chief Executive Officer at renewable energy analysts New Energy Finance, welcomes the extensions: “The measures attached to the Bill could hardly be of greater significance to the clean energy industry. Just as it looked like investment activity might be drying up with the general evaporation of credit, and despite the industry’s strong fundamentals, the US Cavalry arrived.”
Solar
In addition to the eight years extension, the solar ITC has also been extended to utilities, which now can take direct advantage of the ITC through the ownership of solar projects.
The solar ITC includes:
- An eight year extension of the 30% tax credit for both residential and commercial solar installations.
- Elimination of the US$2,000 monetary cap for residential solar electric installations, creating a true 30% tax credit (effective for property placed in service after 31 December 2008).
- Elimination of the prohibition on utilities from benefiting from the credit.
- Allowance for Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit.
The Solar Electric Power Association (SEPA) welcomes the news saying that based on announcements and discussions with utility executives this year it predicts that utilities will quickly become the largest and one of the most important customers for the solar industry, expanding solar markets “beyond analysts’ expectations.”
“This is a very positive development for the utility industry as it will go a long way to putting solar power within reach of many more Americans,” says Jim Rogers, Chairman, President and Chief Executive Officer of Duke Energy, a SEPA member. “It is exactly what we need as we explore investing US$100 million to install, operate, maintain and dispatch solar panels on our customers’ rooftops in North Carolina…” Julia Hamm, SEPA Executive Director, adds: “The extension of the tax credit also significantly increases the likelihood that recently announced solar projects will come to fruition.”
SEPA says one example is Pacific Gas and Electricity, which announced two 550 MW and 250 MW photovoltaic (PV) projects in August, which are contingent upon the extension of the federal ITC.
Wind
The wind industry only receives a one year extension of the PTC, which does not provide the long-term certainty some investors may have looked for. However, Greg Wetstone, Senior Director of Governmental and Public Affairs at the American Wind Energy Association (AWEA), welcomes the extension non the less.
“We salute Members of Congress in both parties who fought under difficult conditions to keep the renewable energy production tax credit and small turbine investment tax credit on the agenda until the very end, and then pushed them across the finish line.
“These tax credits are essential to the continued growth of wind energy, to the economic and energy security of the United States, and to a successful beginning in the fight against global warming,” he says.
Fuel Cells
The fuel cell indsutry also sees an eight year extension of the ITC. According to a Department of Energy (DoE) study, the commercialisation of fuel cells could generate 675,000 new jobs over the next 25 years.
Robert Rose, Executive Director of the US Fuel Cell Council (USFCC), says: “With reliable, long-term incentives now in place, we are confident that our manufacturers will see an increase in demand for their products. In addition to helping stimulate the creation of more green-collar jobs, these incentives will allow more businesses to purchase clean, efficient technologies that will help them lower their green-house gas emissions.”
Other
Geothermal and marine renewables receive two years extensions of the PTC. However, with the long lead times in many geothermal applications, this could be seen as too short a time-scale. Biodiesel sees a one year extension of its current US$1/gallon tax credit.
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