Solar and wind-farm developers are increasingly anxious about a key federal incentive that could prompt a slowdown in the U.S. renewable energy market if it is allowed to expire at the end of the year.
Solar and wind-farm developers are increasingly anxious about a key
federal incentive that could prompt a slowdown in the
U.S.
renewable energy market if it is allowed to expire at the end of the year.
Government incentives included in the Recovery Act Congress passed last year
helped the industry survive the brutal recession and the aftermath of the worst
financial crisis in decades. The magic serum has been a government program that
provides a 30% investment tax credit to developers in the form of a cash grant
for building new solar and wind farms. The cash gives developers access to more
capital.
The program is slated to expire Dec. 31, casting a cloud over the nascent clean
energy industry and rallying supporters. Both federal and state governments
have looked to green technology as a potential engine of economic growth and
job creation. On Saturday, President Barack Obama used his weekly address to
make that case.
"There is perhaps no industry with more potential to create jobs now--and
growth in the coming years--than clean energy," Obama said.
Government incentives and regulations have long spurred the
U.S.
renewable-energy industry. Environmental requirements established in
California
and
other states helped the industry establish itself. Later, federal incentives
allowed it to grow, reduce costs and better compete against rivals in
Europe
and
China
,
where governments have provided more lavish incentives and financial support.
Some
U.S.
lawmakers are trying to preserve support for the nation's renewable energy
industry.
Later this year, U.S. Sen. Maria Cantwell, a Democrat from
Washington
State
,
plans to introduce an amendment that would extend the cash-grant program. A
similar attempt failed in June.
Sens. Jeff Bingaman, a Democrat from
New
Mexico
and Sam Brownback, a Republican from
Kansas
have
introduced legislation that would require
U.S.
utilities to use renewable sources for 15% of the electricity they sell by
2021. But the senators don't plan to include an extension of the cash-grant
program, or other incentives in the bill, said Bill Wicker, a spokesman for the
Senate Energy & Natural Resources Committee.
Bingaman, who chairs that committee, and Sen. Olympia Snow, a Republican from
Maine
,
introduced a bill last week that would make $2.5 billion in tax credits available
to clean-technology manufacturers. However, the bill would not extend the
cash-grant program, or extend renewable energy investment tax credits past
their current 2012 expiration date--another key provision developers are
pressing for.
Without an extension of the tax credits, many developers say they won't invest
in new projects beyond those they're currently planning to build.
The
U.S.
wind-power market, which has struggled this year amid low power demand and
depressed prices for fossil-fueled power generation, will continue to slide if
the cash-grant program is not extended, said Michael Garland, chief executive
of San Francisco-based wind-power developer Pattern Energy.
"We are 50% down this year and we'll be 50% down next year without the
cash-grant extension,"
Garland
said.
"You can't expect the wind industry to live through a setback like
that."
The U.S. solar-power market, which grew nearly 40% in 2009 and is on track to
nearly double this year, is also likely to slow down if the cash-grant program
ends in December, said Arno Harris, chief executive of solar-power developer
Recurrent Energy.
"At the scale this industry is at now, it doesn't make sense" to
remove the federal incentive, Harris said.
Banks that arrange financing for
U.S.
solar
and wind farms also have expressed doubts about the pace of
U.S.
renewable energy development if the cash-grant program is allowed to expire.
"It has spurred a lot of the growth we've seen this year," Gisela
Kroess, a director at UniCredit SpA (UCG.MI), said at a renewable-energy
finance conference Thursday. Kroess added that "the outlook is
uncertain" for the cash grant program's extension and with it, growth of
U.S.
renewable-energy financing deals.
UniCredit is one of six lenders that agreed last month to provide financing for
a 45-megawatt
California
solar
farm being developed by Eurus Energy--a Tokyo Electric Power Co. (9501.TO) and
Toyota Tsusho Corp. (8015.TO) joint venture --and
U.S.
independent power producer NRG Energy Inc. (NRG).
While Cantwell and other Western state senators aim to extend the cash-grant
program, as part of a strategy to create jobs and support the growing
U.S.
clean-energy industry, they are likely to face resistance from other lawmakers.
On Saturday, Obama warned Republican lawmakers want to reverse incentives for
clean energy projects, which would threaten jobs, increase
U.S.
reliance on foreign oil and put the
U.S.
at a
competitive disadvantage to
China
and
other nations.
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