Advocates and developers of renewable power in the U.S. got an early Christmas present late Dec. 16 when the U.S. House of Representatives joined the Senate in passing a one-year extension of the Department of Treasury Section 1603 tax grant program (TGP) as part of the Middle Class Tax Relief Act of 2010.
Treasury Secretary Tim Geithner’s statement about passage of the bill said that "The agreement extends the 1603 program, which provides payments in lieu of renewable energy tax credits and is helping to support tens of thousands of jobs in the wind and solar industries."
Solar Energy Industries Association President and CEO Rhone Resch commented: "The program was created by the American Recovery and Reinvestment Act (Section 1603) to provide commercial solar installations with a cash grant in lieu of the 30 percent solar investment tax credit (ITC). President George W. Bush signed the 8-year ITC into law in 2008, but the economic conditions created by the global recession made it clear that few would be able to utilize the tax credit.
"So far, the TGP has helped move forward more than 1,100 solar projects in 42 states and supported $18 billion in investment. The program has been critical in allowing the solar industry to grow by over 100 percent in 2010."
Karl Gawell, executive director of the Geothermal Energy Association (GEA) commented: "GEA applauds Congress’ decision to extend the Section 1603 tax credit reimbursement program in the recently passed tax legislation. This extension is a substantial benefit to new geothermal power projects. Several hundred Megawatts of new geothermal power are expected to be in or near full construction in 2011, and this provision will greatly facilitate their ability to obtain the several billion dollars of capital investment needed to move them forward, create thousands of new jobs, and bring additional baseload geothermal power on-line in the US.
"Under the terms of the law as amended by the new legislation, if projects commence construction by the end of 2011 and complete construction by the end of 2013, they can obtain a cash grant from the US Treasury to defer a portion of their capital cost. In these difficult economic times, this grant program has demonstrated effectiveness in supporting investment in new geothermal and other renewable projects. However, in the future, Congress should address the need for consistent, longer-term tax policies to provide incentives for continued growth. Geothermal projects often have lead times of five years or more, and relying on short-term tax incentives will not provide the markets the stable, consistent signals needed to help geothermal companies find, develop, and bring-on line the tens of thousands of megawatts of undeveloped geothermal resources in the United States."
President Obama signed the legislation on Friday.
Sources: Geothermal Energy Association, Solar Energy Industries Association, U.S. Treasury Department