Alternative energy tax credit may soon expire

WASHINGTON — Congress is putting the short-term future of renewable energy companies in jeopardy even as most candidates and lawmakers hail windmills, solar panels and biofuels as long-term solutions to high gasoline prices and global warming.

Some $500 million in investment and production tax credits will expire Dec. 31 unless Congress renews them. Without that help, solar and wind power companies say they will reverse planned expansions and, in many cases, cut payrolls and capital investment.

Schott Solar has visions of quadrupling its operation in Albuquerque, N.M., to reach 1,500 jobs and $500 million in investment. But the investment tax credit, company spokesman Brian Lynch said, is what makes solar power cost-competitive. Without it, expansion plans must be reconsidered.

“We don’t want to build a giant factory that the market doesn’t need or want,” Lynch said.

The Solar Energy Industries Association says some 20 utility-scale solar power plants, many in California and together capable of producing power for a million homes, are at risk.

Proponents of wind power, a nascent industry that relies on skittish investors, are in a similar predicament. Greg Wetstone of the American Wind Energy Association says his group is predicting a loss of 76,000 jobs and $11.4 billion in investment if Congress allows its production tax credit to expire.

“Investors like to know what tax policies apply when they are putting millions of dollars down on a project,” he said.

Congress let the credit expire in 2000, 2002 and 2004. In those three years, wind capacity installation dropped 93 percent, 73 percent and 77 percent, respectively, from the previous year.

Navigant Consulting, which advises on renewable energy technology, estimated that investments in wind and solar power in 2009 would amount to $26.6 billion with the credits; that would fall to $7 billion without them.

The credits are expected to total $334 million, according to congressional estimates.

“These companies are shutting down projects, firing people and it’s Congress’s fault,” said Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee.

Investment tax credits, available to homeowners and businesses that invest in solar power equipment, and the production tax credit, based on kilowatt hours of energy produced by wind, geothermal, biomass and other renewables, are only two of dozens of temporary tax breaks that die out after a year or two if Congress does not revive them.

This year Congress is considering tax-extenders worth more than $50 billion over the next decade. The production tax credit would cost $7 billion and two solar investment credits would cost $2.7 billion over 10 years.

In addition to breaks for renewable energy and energy conservation, several dozen other tax breaks are targeted to businesses and individuals. They include people paying state and local sales taxes; parents with higher education tuition costs; and teachers with out-of-pocket expenses.

Almost all the provisions are popular. But Senate Republicans have blocked consideration of tax-extender plans by Senate Finance Committee Chairman Max Baucus, D-Mont. GOP lawmakers are protesting efforts to offset the costs with other taxes or other items attached to the proposals. In the House, conservative Democrats promise to block any extension that adds to the deficit.