Congress asked to Extend Credits

Geothermal wants its share

Bill Opalka | Oct 23, 2011


The prospect of Congress approving an extension of cash grants for renewable projects seems dim, but there are other tax credits for renewables that are starting to sunset that have segments of the clean energy industry concerned.

Take, for example, the geothermal energy industry and the investment tax credit.

A concern mentioned often at the just-concluded Solar Power International conference was the impact of the 30-percent investment tax credit that is set to expire in 2016. Most observers expect it will not be renewed.

Geothermal should be so lucky. The industry was able to get an extension during the stimulus legislation that runs through 2013. Now, it would like an extension to conform to those offered for wind and solar.

The industry points out that since 2005, the U.S. geothermal market has grown from 2,737 megawatts of installed base load capacity in 2005 to 3,102 megawatts in 2010. That’s a rather small base to start from, but the project pipeline now extends to 15 states.

Tax incentives for geothermal energy expire at the end of 2013.  The Geothermal Energy Association says this isn’t enough time for many geothermal projects that are counting on the incentives.  These projects typically require between four and eight years to complete, according to GEA.

“Our nation has among the world’s most promising geothermal energy resources, but without the support of long-term tax incentives, we will not see the investment necessary to develop this invaluable domestic source of base load renewable energy,” GEA told Congress.

Going forward even more projects are under development.  According to GEA, there are projects under development in some 15 states.

GEA also said the Department of Energy has recently approved investments in several important geothermal technology research projects for the first time in decades.

In the existing tax code, geothermal incentives expire at the end of 2013, but for solar energy the 30 percent Investment Tax Credit runs through 2016.  In this Congress, legislation has been introduced to address the disparity by extending the 30 percent ITC for geothermal to 2016 as well.

A bipartisan bill, drafted by representatives and senators from western states, was recently introduced.

“We understand that a principal reason for providing solar projects the 2016 deadline was the long lead-times expected for concentrated solar power projects,” according to GEA.  “We believe that geothermal projects, with considerably longer lead times than currently faced by solar projects, warrant a comparable time frame.” 

Geothermal resources in the U.S. remain largely untapped, because of the high risk of finding and proving geothermal resources.  If the resource is to be tapped, a window longer than two years will be needed.

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Virtually every form of energy generation in the United States receives a subsidy of one form or another. Lacking a coherent mid-to-long range national energy policy certainly does not help us determine what to subsidize, for how long and at what level. This lack of clear vison is problem number one.

Problem number two is that every other country in the world subsidizes renewable  energy generation heavily and in all aspects. Manufacturing of renewable energy hardware such as solar panels, feed in tariffs to support the higher price of renewable energy, publicly funded research and development, generous tax credits to renewable energy developers, free land for project sites, and on and on. The simple truth is that in the case of solar particularly this country cannot run with our Chinese competitors, or even those in Germany, Malasia or Mexico without predictable and long term subsidies, whether the section 1603 rebates or the investment tax credit or other government supports.

Solar in the United States has far exceeded what even the greenest advocate would have predicted not many years ago. It is undeniable that section 1603 rebates, accelerated depreciation and other subsidies have played a significant role in this growth. Now we are left with a solar industry employing 100,000 people domestically in direct solar employment plus who knows how many how many thousands more in related and suppoprt industries such as trucking and construction, but their future and the future of solar technology itself are threatened by the same old problem - a complete lack of planning, direction and leadership in Washington. 

Of all the industries that we subsidize with public funds, is there a better example of success than solar? No other industry in the U.S. employs more people than solar. Even foreign companies are manufacturing here now; Mage (Germany) employs 300 + people at their new plant in Dublin, Georgia and China's largest solar manufacturer is about to open a vast new facility near Denver. Westinghouse and others are moving ahead with R & D and presumably soon with actual manufacturing of thin film solar. And, utility-scale solar projects are being commissioned at a phenomenal rate. Here in Massachusetts, not exactly the sunshine capital of the world, and especially where I live on Cape Cod solar projects are being built by towns and businesses at an incredible rate. My first venture as a project manager for solar is on the roof of the retail building next to where I am sitting. It is a 183kw system using SunPower panels and Satcon inverters. Satcon, by the way, is an American based company.  While we were installing we had a an eye-catching sign on the grass at our roadside in front of this 15,000 square foot liquor store. It said Ice cold beer - Chilled By the Sun.

This particlar system cost $1.3 million and will be paid off in 38 or so months from date of commissioning. The combined impacts of rebates, tax advantges  and income from Solar Renewable Energy Credits are dramatic and make this sytem a winner for everyone. Add to these advantages the energy savings due to smart metering and the reduction in green house gases directly attributable to this system and we must ask, "What's not to like?" I am involved in planning more solar systems, all here on Cape Cod, ranging in size from 200kw+ to over 400kw. All of these will be on private commercial property. None of these would have been possible without the existing subsidy supports we now see coming to an end but all will generate enormous benifits for their owners, their communities and the environment. Just my little solar activities will support two-to-three dozen American jobs directly and many more indirectly. But, for some reason it makes sense to our elected representatives and leaders to kill this golden goose.

I simply do not understand why we are so self-destructive. While it is certainly true that government subsidies can be abused abd that they are not infrequently handed out to political pals, it is also true that these subsidies put tax payers' money back into the economy in ways that benefit all. If the measure of of a subsidy's merits and success is the measurable positive results flowing from it solar has to be one of the all-time winners. While we pour money into new infrastructure and the repair of infrastructure destroyed by war, often by U.S. military activities, we continue to neglect our own. Are we being penney wise and pound foolish?


Peter Kenney