Wind and Solar Firms Await Tax Break Extensions

Last year, the U.S. wind industry grew by 45% and installation of solar capacity increased by 125%. However, the uncertain future of beneficial federal tax credits has wind companies holding their breath and the solar firms hoping they don't get burned. Originally created in the Energy Policy Act of 1992, the federal production tax credit (PTC) has had a bumpy road, expiring due to congressional inaction on three different occasions. The latest version, extended one year to December 2008, provides a 1.9 cent per kilowatt refund for renewable energy facilities and a 30% credit toward total project cost.

The legislation has been a boon to the renewable energy industry. In a recent press release, the Solar Energy Industries Association said, that most of its industry's growth is "directly attributable to the solar investment tax credits."

The one year extension hasn't been enough to keep investors from getting nervous. And for good reason. The last time the PTC was allowed to expire in December 2003, wind power installations fell 75% the next year. A new study (pdf) by Navigant Consulting estimates that losses totaling 116,000 U.S. jobs and nearly $19 billion in U.S. investment could be on the way if the PTC is not renewed.

Gregory Wetstone, Senior Director for Public and Government Affairs of the American Wind Energy Association warns that, "investors are holding back because of Congress’s delay in extending renewable energy tax credits, undermining one of the brightest and fasting growing areas of the American economy."

A new bill, titled the Renewable Energy and Energy Conservation Tax Act of 2008 (H.R. 5351), is currently under consideration in the House of Representatives, and extends the PTC until 2011. The 10-year, $18.5 billion bill also provides a host tax breaks for renewable energy, efficiency, plug-in hybrids, and more. However, it looks like the oil companies may be getting the short end of the dip stick as they will be losing $1.4 billion in subsidies and tax breaks annually to offset costs.

With a recent Zogby poll showing 85% of Americans supporting greater incentives for renewable energy projects, support from environmental groups, and an aggressive lobbying effort on the part of wind and solar industry, I wouldn't be surprised to see this legislation receiving the red, nay green, carpet treatment in Washington.

Bonus Link:
The Center for American Progress has a great breakdown of H.R. 5351's provisions.