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Tax Credits Extended: Renewable Energy Industry Breathes Sigh of Relief

After a disastrous few weeks on Wall Street, the renewable energy industry has come out a winner. It seems there's always a silver lining in even the worst developments.

The long-awaited extension of the Production (PTC) and Investment Tax Credits (ITC) were finally passed as part of the Emergency Economic Stabilization Act of 2008 (H.R. 1424) and have now been signed into law by President Bush. The tax credit package, which is the same that passed the Senate on September 24, will extend the PTC for one year and the ITC for eight years. The extensions would be at least partially paid for by a change in the tax code for the oil and gas industry.

The bill also contains removal of the US $2,000 cap for residential solar installations. The controversial US $700 billion bailout package has been in the works in Washington since last week due the failure of several major U.S. banks and financial institutions. The bill was initially voted down in the House on Monday and was re-worked and re-introduced by the Senate on Wednesday.

Wind and solar businesses around the country are breathing a bit easier today.

“The American solar energy industry received a boost today with the passage of H.R. 1424, which included a provision to extend the tax credits for renewable energy by eight years. This legislation will enable companies like SCHOTT Solar to continue to invest in American production, American jobs, and America’s energy independence," said Mark Finocchario, president and CEO of SCHOTT Solar.

Ron Kenedi, vice president of Sharp Solar said that the tax credit extenstions will help the U.S. solar industry become a bigger part of the generation picture and bring down its costs.

"Solar is becoming a competitive energy source that can address our nation’s growing energy demands with a clean, reliable and renewable source of power. The solar industry is now scaling up to bring down manufacturing and installation costs, build its infrastructure, grow public awareness, and attract customers. The 8-year extension of the solar investment tax credit will help the solar industry flourish to its full potential," Kenedi said.

The American Wind Energy Association (AWEA) applauded the vote this afternoon.

“We salute Members of Congress in both parties who fought under difficult conditions to keep the renewable energy production tax credit and small turbine investment tax credit on the agenda until the very end, and then pushed them across the finish line," said Greg Wetstone, senior director of governmental and public affairs for AWEA. "These tax credits are essential to the continued growth of wind energy, to the economic and energy security of the United States, and to a successful beginning in the fight against global warming.”
 
Geothermal firm Raser Technologies also thanked Congress for passing the important legislation that will also benefit the geothermal industry.
 
“The extension of the production tax credits encourages aggressive growth in renewable energy development and supports our rapid deployment strategy for building a number of geothermal power plants over the next decade," said Brent Cook, Raser’s CEO.
 
Highlights of the package include:
  • An 8-year extension of the residential and business ITC for solar, small-wind and geothermal systems
  • An elimination of the US $2,000 cap on the residential ITC
  • Elimination of the prohibition on utilities from obtaining the ITC
  • Authorization of US $800 million for clean energy bonds for renewable energy generating facilities
  • A 1-year extension of the PTC for wind projects
  • A 2-year extension of the PTC for geothermal facilities
  • Creates a 2 year ITC for marine energy technologies (tidal, wave, current, ocean thermal)
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