11th hour rescue for renewables cash grant?

9 December 2010
A last-ditch effort to preserve the critical US Treasury grant programme for renewable energy projects may fall short amid Republican opposition, despite the urgent pleas of renewable trade associations, developers and green groups.


Legislation proposed last week by Max Baucus (D-Montana), chairman of the influential Senate tax committee, would have extended the Section 1603 Treasury grant programme created by the American Recovery and Reinvestment Act (ARRA) until 31 December, 2011. The programme, set to expire at the end of this year, has supported more than $18 billion in project investments and more than 8,600MW of installed capacity.

The bill would have also provided an additional $2.5 billion for the Section 48c advanced manufacturing tax credit, which was established by ARRA to provide a 30% investment tax credit for factories that make advanced energy equipment. That exhausted its $2.3 billion funding appropriation in January.

The Baucus bill failed a procedural vote over the weekend and its provisions are not included in the framework agreement between President Barack Obama and Congressional Republicans to extend the Bush-era tax cuts due to expire at the end of 2010 and unemployment benefits. But the details are still being hammered out and renewable energy advocates hope to attach the cash grant provision to the tax bill, with some legislators indicating the extension is at the top of the list of items to be added.

“We really, really have a lot at risk right now and we’re conveying that as much as possible to both sides,” said Denise Bode, CEO of the American Wind Energy Association.

But the prospects seem murky at best. Some Congressional Republicans have expressed opposition to extending any ARRA provisions and Congress is tentatively scheduled to adjourn for the holidays by the end of next week.

Rhone Resch, president and CEO of the Solar Energy Industries Association, said it is imperative “to put partisan politics aside” and ensure that the renewable energy sector continues to grow.

“I don’t want you to think of us as desperate, but some companies are nervous,” he said. “Their livelihood is at stake.”

The extension is seen as critical to prevent a total collapse of the sector amid ongoing difficulties attracting tax equity investment. The industry needs about $7 billion-$8 billion in financing next year, but only $4 billion is projected to be available and developers will have to compete for those dollars, Resch said.

“The equity markets are still very limited,” Bode agreed.

Developers are scrambling to get projects on track before the current deadline, but many will be scrapped if they can’t, Resch said. Solar is poised to have a record year of growth in 2010 with more than 1,000MW installed and more than 2,000MW expected in 2011, but that projection drops to about 800MW without the programme, he added.

Thanks to the cash grant programme, manufacturer SunPower recently booked $100 million of projects and is racing to commence construction before the end-of-year deadline, said Julie Blunden, executive vice-president for public policy and corporate communications. “The Treasury grant programme is a threshold policy to continue to move that forward,” she said.

Gloria Gonzalez