Solar developers are breathing a sigh of relief this morning as they wake up to news that the House passed a big tax cut and stimulus bill last night, sending it on to the President for his signature, which is expected this afternoon. The bill, which extends Bush Era tax cuts, extends unemployment benefits, and cuts social security taxes, also extends a popular renewable energy grant program.
Yesterday evening, Lyndon Rive, CEO and founder of a solar financing, installation and maintenance company, Solar City, told me that the if the renewable energy program, which provides grants that cover 30 percent of the cost of solar installations, weren’t extended, “it would be a catastrophe for the entire industry.”
The U.S. Partnership for Renewable Energy Finance has been calling for the extension of the grant program since this summer, when it became clear that the recession would make it hard for solar projects to get financing under a related tax credit program.
The Section 1603 Treasury Grant program was enacted by Congress in 2009 as part of the American Recovery and Reinvestment Act to help address the impact of the financial crisis on the emerging U.S. renewable energy sector. Specifically, by providing tax grants in lieu of credits for qualifying renewable energy investments, the Treasury Grant Program has addressed a critical barrier to the continued flow of capital to renewable energy projects throughout the U.S. at a time when the economic downturn had begun to severely limit the use by investors of the tax credits that have traditionally played a central role in U.S. renewable energy policy incentives …
“If the Treasury Grant Program is allowed to expire in 2010, the level of capital that is available to finance renewable energy is anticipated to decline by more than 50%, jeopardizing the installation of clean renewable power projects throughout the US and our international competitiveness,” said Neil Auerbach, Co-Managing Partner of Hudson Clean Energy Partners.
Rive says that the tax grants are particularly important now that state incentives are starting to wind down, such as a California program that offsets the cost of rooftop solar installations. Under that program, the state aid decreases as sales of solar systems increase. He says that the decrease in incentives has been faster than the decrease in the cost of buying and installing solar panels.