This is not the time to be going to Washington, D.C., with hat in hand, yet that is exactly the position renewable energy developers find themselves in as the clock ticks down on a federal tax provision that has been crucial to boosting green-power installations.
In the latest push to save the Section 1603 Treasury program, which expires on Dec. 31, 2011, a chief beneficiary – the solar industry – has broadened its lobbying effort, forming the “Section 1603 Coalition” and releasing a letter [PDF] to Congressional leaders that urges an extension of the program. Under 1603, renewable energy developers can opt to receive a grant for up to 30 percent of the cost of a qualifying project in lieu of claiming an energy tax credit.
The 1603 Coalition, brought together by the Solar Energy Industries Association (SEIA), boasts representatives from a dozen different clean energy technologies, including things the public tends not to hear much about, like geothermal heat pumps, landfill gas and fuel cells. For instance, one of the groups quoted in the press release announcing the new coalition was the American Biogas Council, which said “an extension of the 1603 program is vitally important to the approximately 300 biogas projects under development across the country.”
Important though the program might be to such industries, by one measure at least solar has far and away been its biggest user. According to an Oct. 31 update from the U.S. Department of Energy [PDF], solar projects made up 22,060 of the 22,747 projects that took the 1603 grant option. Of course, that includes thousands of projects for relatively small dollar figures. Strictly in terms of cash outlays, Section 1603 has benefited the wind industry most, with more than $7.6 billion of the $9.6 billion paid out under the provision going to wind projects. Despite that, the American Wind Energy Association wasn’t listed as a signatory to the 1603 Coalition – perhaps because its current lobbying focus is on extending a different tax provision, the Production Tax Credit.
The grant option was instituted for two years in 2009, as the financial crisis froze up tax equity markets. After heavy lobbying late last year it was extended through the end of this year. In the letter to Congress, the coalition argues that without another extension, financing available for energy projects would shrink by 52 percent in 2012. “This would stifle job creation and severely restrict the market’s ability to leverage private sector capital to finance new domestic energy projects,” the group said.