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AWEA and SEIA Call for Refundable Renewable Energy Tax Credits

Barack Obama will be sworn in as President of the United States next week and as his administration takes over the reins of the republic, the renewable energy industries will be watching closely. Obama has said that he plans for the government to invest US $150 billion in renewable energy and hopefully double generation capacity from renewable sources by 2010. His proposed economic stimulus package could be the vehicle that will deliver on those goals.

The American Wind Energy Association (AWEA) and the Solar Energy Industries Association (SEIA) certainly hope so. The two groups reported in a conference call last week that both wind and solar energy saw record-breaking years in 2008.

The industries will, however face the reality of dramatic reductions in installation figures in 2009 if Congress and the incoming Administration do not take action to help make renewable tax incentives work better in today's slow economy, which has already seen a number of renewable energy companies, including Optisolar and SunEdison, cut jobs in response to lower investment dollars and fewer business deals. The keystone of the action plan that SEIA and AWEA are calling for is making both the investment and production tax credits refundable in order to give more parties access to them.

AWEA CEO Denise Bode and SEIA President and CEO Rhone Resch both cited the need to make the ITC and PTC refundable to preserve their effectiveness in the current economic climate and maintain the very strong growth of both industries.

"Congress must use the stimulus bill to move us away from our backwards-looking, recession-burdened economy and toward a new-era of recovery and prosperity with solar and wind leading the way. Our industries have become powerful economic engines in the U.S., each year creating tens of thousands of new jobs and billions of dollars in economic investment. And we have the potential to put millions more Americans back to work. But due to the recession, projects are now being put on hold, factories are closing and workers face potential layoffs unless Congress refines the tax credits now so they work as originally intended," Resch said.

The solar energy industry employs more than 80,000 people in the U.S. and created more than 15,000 jobs in the last two years. According to a 2008 report issued by Navigant Consulting, the solar energy sector alone will create 440,000 permanent jobs and spur US $325 billion in private investment by 2016 with the ITC in place.

AWEA estimates that last year the wind industry installed a record 7,500 megawatts (MW) of capacity in the U.S., bringing total wind capacity in the U.S. to about 24,000 MW. The solar industry is estimated to have nearly doubled the growth of solar PV installations in 2008.

"We applaud President-elect Obama's aggressive goal of doubling the production of alternative energy in the next three years. Wind energy is ready to do its part, but we face a major obstacle in this economic downturn," Bode said.

"We can continue to grow through this difficult period only if the new Administration and the 111th Congress act immediately to make renewable tax incentives refundable so they can work as they are intended to — even in the current financial context. This is a critical first step to building the new, clean energy economy."

In 2007 and 2008, more than 50 wind energy manufacturing facilities were opened, expanded or announced in the U.S., adding 14,000 employees. More than half of those jobs were added in 2008, even as the overall U.S. economy was faltering.

On October 3, Congress passed extensions of the ITC and PTC. Bode and Resch noted that current economic conditions substantially reduce the effectiveness of these tax credits since most companies and individual tax filers expect lower, if any, tax liabilities. If the credits were refundable then those without tax liabilities that need to be offset with a credit would simply receive a government refund check. Making renewable tax credits refundable, like those for biodiesel and other alternative transportation fuels, could go a long way to ensuring continued wind and solar industry growth in 2009 and 2010.

In terms of the added cost that the changes would bring, both Resch and Bode said that the increased cost of making the tax credits refundable would be negligible. It would be tantamount to more businesses, utilities and other entities taking advantage of the tax credits in their current structure.

Both groups said that they have been in touch with the tax staffs of members of Congress in addition to the Obama transition team. The changes to the tax credits are not included in the draft text of the stimulus bill that has been circulating.

Both Resch and Bode said that the main stumbling block is precedent. In other words, the tax staffers are saying that they have never seen a change like this made to a tax credit and there are questions about how it would be codified into legislation. The industry is hoping that public opinion and Obama's announcement to double generation capacity will make up for any lack of will on the part of Congress.

"The American public overwhelmingly supports renewable energy and these policies. Our elected leaders have an opportunity to support renewable energy in the stimulus bill that will keep these vitally important industries growing in the U.S.," Resch said.

To hear clips from the joint news conference put on by SEIA and AWEA, click on the links below.

Rhone Resch talks about how changing the tax credit structure will result in an immediate positive impact for the renewable energy industry.

The financial turmoil is the U.S. is already having an impact on the wind industry according to Denise Bode.

Resch and Bode said working with Congressional tax staffers to help them understand the impact the changes would make is important.

To hear interviews and commentary on the upcoming year in U.S. politics for renewable energy, listen to this week's Inside Renewable Energy podcast.

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Former Editor at RenewableEnergyWorld.com, now Assistant Counsel at the New York State Department of Public Service, regulating New York's electricity, gas, and telecommunications industries.

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