More Stimulus for Renewables?

A possible change in federal incentives for solar power projects could soon extend to all renewable energy producers, if draft language in the $825 billion stimulus bill working its way through Congress can make it into law.

Already, the massive and ever-changing bill may help the solar power industry with one of its key goals — getting investment tax credits that aren’t of much use today shifted to direct payments from the federal government (see Tax Credit Fix for Solar in the Works).

But another section of the draft stimulus bill would allow wind power producers and other renewable energy projects that now receive production tax credits — a 1.9-cent per kilowatt-hour benefit for the first ten years of operation — to shift them to 30-percent investment tax credits like those now enjoyed by solar power projects.

And if this change —  along with the shift from investment tax credits to rebates — remain in the stimulus bill, that could help wind power and other renewable power projects keep up their growth, said Scott Brown, CEO of New Energy Capital, said Thursday at the Clean-Tech Investor Summit in Palm Springs.

The problem with tax credits, he explained, is that many Wall Street banks and other investors that saw big losses last year don’t have taxable income to offset. That, along with the credit crunch and general economic downturn, has made financing renewable energy projects very challenging, he said. 

The changes now being considered for the stimulus bill “could be very valuable” in helping ease those challenges, he said, since they would allow wind power and other renewable energy projects join solar power in receiving rebates in lieu of less useful tax credits.

But there’s a catch. Right now the tax credit-to-rebate shift is only set to apply to projects that can be producing energy by the end of 2010, Brown said.  That may be reasonable for wind and solar photovoltaic projects now being developed, he said.

But many forms of renewable energy projects — biofuel plants, solar-thermal plants, combined heat-and-power projects — will likely take longer than two years to build, he said. 

“What they should do is allow hem to take the credit against any expenditures taken before 2010,” is Brown’s suggestion to Congress. “That would benefit those that have longer construction timeframes.”

Of course, there would have to be safeguards in place to ensure rebates aren’t taken by projects that then fail to be completed, he said.

And of course, then there’s no guarantee that any of this — or other proposals to help green technology efforts like smart grid deployment — will make it into the final stimulus bill.