Congress Renews Solar Tax Credit

In the solar energy industry, manufacturers of solar energy technologies can breathe a sigh of relief. But, only for about a year.

Red Herring reports that the extension of the solar tax credit passed, under the Tax Relief and Health Care Act of 2006, as part of a 79-9 vote for extending several tax breaks. Also renewed were energy incentives for wind, biomass, geothermal, and energy-efficient commercial buildings.

The bill passing the extended solar tax credit has two provisions:

Residential Solar Tax Credit: Extends a 30-percent tax credit, created in the Energy Policy Act of 2005, for the purchase of residential solar water heating, photovoltaic equipment, and fuel cell property. Expires after December 31, 2008.

Business Solar Tax Credit and Fuel Cell Tax Credit: Extends a 30-percent business credit, established in the Energy Policy Act of 2005, for the purchase of fuel cell power plants, solar energy property, and fiber-optic property used to illuminate the inside of a structure. After December 31, 2008, the credit reverts to a permanent 10-percent level.

Joel Makower, principal at Clean Edge, a prominent clean technology consultancy, said, "every year-long extension helps, but we need a 10-year extension to create years-long certainty that the market is going to grow."

Experts in the piece agree that the extension should allow for the continued growth of large-scale solar projects in the coming year, however it calls to attention the importance of a longer-term policy. Senator John McCain states that the term of the policy impacts investors.

"If there’s only a two-year horizon, even though they’ve never failed to renew it, there’s less confidence,” he said.

The Solar Energy Industries Association (SEIA) is pushing for an eight-year extension, and there are hopes that at least something long-term will materialize given the Democratic majority inhabiting Congress right now.

Delivering a sobering dose of practical forecasting, Makower says, "if we can’t get something that simple to pass in the new Congress, there is really no hope."

See the Cleantech blog for more info.


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