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U.S. Solar Industry Fights to Save Controversial Clean Energy Grants

End of federal clean energy grant program could mean renewable energy sector will shrink 56% next year, one study warns

By Stacy Feldman

Nov 16, 2010

The solar industry called on Congress on Tuesday to extend a contentious grant program in the lame-duck session that it says produced 20,000 solar jobs in a year and half and helped to jump-start the U.S. clean energy economy.

The U.S. Treasury's "Section 1603" , part of the $787 billion anti-recession stimulus of 2009, is slated to run out at year's end.

Under the program, green energy developers earn almost immediate grants of 30 percent of project costs, unleashing funds quickly, in lieu of longstanding tax credits.

As of late October, the money supported roughly 1,100 solar energy systems in 42 states, including 97 solar thermal installations, according to from the (SEIA), the top trade group.

"It is absolutely critical that during the lame-duck session ... Congress extend this program and give support and consistency to those companies who are investing in the solar industry," Rhone Resch, chief executive of SEIA, said on a conference call with reporters Tuesday.

Resch said relying on the tax credit would be a mistake because it depends on tax equity markets that froze up amid the 2008 financial crisis and may not recover until 2012.

"We still have a massive gap between the tax equity appetite of the marketplace and what's available from the lending institutions," Resch said.

He and his colleagues at solar companies are pushing for two more years of grants.

Edward Fenster, co-founder and CEO of , a Calif.-based residential solar financing firm, said that with the extension SunRun would "likely generate" 6,000 new jobs and add 36,000 home solar installations.

The push comes a month after the 1603 program was under fire from critics who said supporters had falsely exaggerated its successes, including jobs gains.  The criticisms were a result of media analyses by and the that found that green energy developers ate up hundreds of millions of dollars for facilities they had completed before the program began.

The IRW analysis, co-published with MSNBC, said that 11 wind farms that received a total of $600 million had built their facilities during the Bush administration.  Another 19 were completed under Pres. Obama but before stimulus dollars were doled out.

About 85 percent of the nearly $5.5 billion that has been dispersed has gone to the wind sector, according to .

The solar industry strongly defends the program and says it needs the money to stay alive.

The SEIA cites a by the , a non-profit organization, which estimated that if 1603 grants end this year, total financing for renewable energy projects would shrink by about 56 percent in 2011.

A last May by , a private research group, said the two-year extension would produce 65,000 new green-collar jobs in 2015.

"There is no better return on the taxpayer's dollar than the 1603 program," Resch said.

But Kenneth Green, a resident scholar at the think tank, told SolveClimate News that claims of job creation from the grants are "nonsense."

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