The U.S. House of Representatives passed an $819 billion stimulus bill Wednesday that contains some key aid for the ailing renewable energy industry – but a Senate version of the same bill might not be as welcome to the industry.
Along with a host of plums for renewable energy – $8 billion in loans for renewable energy power generation and transmission projects and $2 billion for energy efficiency and renewable energy research – the House version of the stimulus bill contained a provision to convert investment tax credits that solar power developers rely on into direct payments to investors for the next two years (see Tax Credit for Solar in the Works).
Under the provision, the Department of Energy would pay grants equal to the amount of tax credits – 30 percent of qualifying costs of a project – directly to renewable power developers. The problem with using tax credits to lure investors today is that Wall Street banks and other renewable energy investors that saw big losses last year don't have taxable income to offset, and thus no appetite for them.
Adding the DOE program would be a hu ge boon to a renewable energy sector that's seen both debt and equity financing for projects dry up in the past few months, industry leaders say. Last year saw about $5.5 billion in tax equity deals, but without changes to the way the credit works, that could fall to $2 billion to $4 billion – and that for a solar industry expected to need more than $10 billion for projects in 2009.
But a version of the bill now being circulated in the Senate doesn't contain the DOE grant provision, Chris O'Brien, head of North American market development for Swiss solar equipment maker Oerlikon Solar, said Wednesday.
The two bills will have to be reconciled at some point, and the Senate is scheduled to vote on its version of the bill next week. Renewable power developers will no doubt be watching those debates closely.
The Senate bill did contain some good renewable energy provisions, O'Brien said. Chief among them was a 30 percent manufacturing tax credit available to companies that make solar panels, wind turbines and other equipment for renewable energy projects - something he said will be key to getting manufacturers to build factories in the United States. That credit has a $2 billion cap, he said.
But the Senate bill lacked a provision contained in the House bill that would allow wind power projects to convert the production tax credits they can now get for the energy they produce into investment tax credits like those enjoyed by solar power projects, O'Brien said (see More Stimulus For Renewables?).