The Sandbox

Late last year in its waning hours, the 109th Congress passed legislation to extend the 30 percent solar energy investment tax credit for homeowners and businesses for one additional year, through the end of 2008.

National trade association of the solar energy ecosystem the Solar Energy Industries Association (SEIA) at the time applauded the one-year extension of the solar ITC in H.R. 6111, the “Tax Relief and Health Care Act of 2006,” but at the same time cautioned that the lifespan of the credits is too short to encourage significant industry growth and cost reductions.

“While this bill does not constitute a long-term solar growth policy, it does provide some breathing room for solar projects in the 12- to 18-month pipeline,” said Rhone Resch, SEIA President.  “It ensures that the solar industry will continue to grow at a record rate in 2007.  The passage of this bill with an extension of the solar ITC is recognition by Congress that solar is indispensable to our clean energy future."

An eight-year extension of the ITC will remain the solar industry’s top legislative priority in 2007.  A long-term extension is essential to reducing the cost of solar energy, as it would create market conditions that allow solar companies to make investments and drive down costs through economies of scale.  A longer duration will also be needed to help stimulate the development of large-scale concentrating solar power projects.

Resch also expressed optimism at the time that the 110th Congress would enact an eight-year extension as contained in S. 2677 and H.R. 5206, the “Securing America’s Energy Independence Act,” a bill which gained a bipartisan group of 80 House and 15 Senate cosponsors this year.

“This bill is a patch, and emphasizes the importance for Congress to enact long-term, comprehensive clean energy legislation when they return in January,” said Resch.  “We look forward to working with the next Congress, to craft a comprehensive and effective policy blueprint for a self-sustaining clean energy infrastructure in the United States.”

Specifically, the bill contains the following 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.

What do you think, are these tax credits enough to propel the industry forward?

--Ann Steffora Mutschler, Senior Editor