As the U.S. Senate began its consideration of an economic stimulus package Thursday, renewable-energy companies were hoping for another reprieve.
That's because on Wednesday evening, the Senate Finance Committee added a one-year extension of tax credits for solar, wind, geothermal and other clean-energy technologies to the package.
The tax incentives, set to expire at the end of this year, are expected to cost $3 billion over 10 years.
Green-energy companies had been disappointed when a larger set of incentives, which would have amounted to $21.5 billion in renewable tax credits over the next decade, was pulled from the U.S. energy bill in December (see Senate Rejects Green Incentives to Pass Energy Bill).
The smaller incentive extension also had been left out of the stimulus package the House passed Tuesday, which has worried greentech investors and entrepreneurs.
Because many energy projects take more than a year to complete, companies have said the incentives' looming expiration date is stalling projects that wouldn't have been completed until after the end of this year.
"Last year, investors channeled more than $20 billion to renewable electricity in the U.S.," said Randall Swisher, executive director of the American Wind Energy Association, in a written statement. "But Congress' delay in extending the renewable electricity credits … is now causing investors to hold back on decisions regarding wind- and solar-power projects that will not come on line until next year."
Development of those projects will likely begin again if the Senate Finance Committee's stimulus package becomes law, although industry insiders complain that the yearly extensions aren't stable enough to allow really big projects, which take more than a year to complete, to go forward.
But even this extension won't take effect unless it is approved by the Senate, the House and President Bush.
And if the incentives aren't extended, the decline in wind-energy investments alone could put 75,000 jobs at risk, with tens of thousands more being threatened in solar, geothermal and other renewable-energy sectors, Swisher said.
Greentech investors seemed to view the possibility of the tax-credit extension as a positive development, sending clean-energy shares up slightly Thursday.
The WilderHill Clean Energy Index, which monitors U.S. clean-energy stocks, was up 0.67 percent to 226.22 points Thursday, from 224.72 Wednesday.
Solar stocks have mainly been sinking this month on fears of an economic recession, high prices for solar-grade silicon and the possibility that the tax incentives might not get renewed (see Poor Market Conditions? Who Cares?).
Part of Thursday's boost might also have come from solar-cell and panel manufacturer Evergreen Solar (NSDQ: ESLR), which rose 1.75 percent to $12.19 per share Thursday after posting fourth-quarter earnings that beat analyst expectations.
The company reported its first-ever profit of $788,000, or 1 cent per share, compared with expectations of a loss of 4 cents per share.
The news that the Senate is considering an extension also could be good for companies that plan to hit the U.S. public markets soon, such as Qiangsheng Photovoltaic Technology. Surely ReneSola, which debuted on the Nasdaq on Tuesday, wishes it had happened a few days earlier (see Investors Too Full for a Share of ReneSola?).