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Hardly a day goes by without a new announcement for the development of a new large utility scale wind farm or solar project.  From a huge solar project in Arizona to a recently announced first of it's kind offshore wind farm off the coast of Delaware.  Tens of thousands of megawatts of new renewable capacity is in the pipeline in various stages of development, but it could all come to a screeching halt.  More below the fold.

In 1992 the federal government created the Production Tax Credit (PTC) as part of the Energy Policy Act of 1992.  The PTC provides a 2 cents/kilo-watt hour credit for electricity produced from qualifying renewable facilities - wind, solar, geothermal - for the first ten years of production.  While it doesn't seem like much, this credit is quite often the difference between a project being economic and it not being economic.

The PTC is set to expire at the end of the year and has not been extended.  The affect of not extending the PTC is already having implications, as investors are extremely hesitant to investin something that is uncertain.  The PTC has been allowed to lapse three times in the past and every time renewable capacity has suffered tremendously, as this chart from the American Wind Energy Association shows:

PTC

And anecdotally several companies have said that they will not continue their projects should the PTC not be extended.  For example, the Spanish engineering firm Abengoa, which is planning the largest concentrated solar power plant in the country 70 miles southwest of Phoenix, has said the plant won't be built if the tax credits expire.  Pretty much every large scale renewable solar and wind project has a provision that if the PTC is not extended the project can be cancelled.

So why hasn't it been extended? Politics, of course.  House Democrats, seeking to abide by "pay-as-you-go" budget rules, insist that the tax credits must be paid for by raising revenue elsewhere. But Senate Republicans have balked at every proposal so far to find that money. Democrats figured to pay for the credit by delaying a tax break for companies with foreign operations and closing a tax loophole for hedge fund managers. This is the thrid attempt to pass the bill, previous attempts have tried to fund the credit by diverting subsidies from oil and gas companies to green projects. President Bush has threatened to veto the bill shold it be resurrected with similar funding provisions.

The cost of the Credit to extend it one year: $7 billion.

A GE study concluded that the revenues lost from the credit are more than made up for in taxes collected.

This link shows who voted for or against the bill.

Extending the PTC just one year would help tremendously, ideally it should be extended five years, the more certainty in the credit the more willing developers are to commit and the sooner we can continue trying to green our electric generation protfolio.

Originally posted to Gangster Octopus on Tue Jun 24, 2008 at 09:53 AM PDT.

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Comment Preferences

  •  John McCain is going to get his "prize money" (1+ / 0-)
    Recommended by:
    JeffW

    out of the pork in the next budget.  

    7 billion seems like a no brainer. I'm sure the oil companies would be happy to come up with that tiny pittance from all the bazillions of dollars in subsidies we are giving them in the face of astronomical profits.

  •  That's a very telling graph there (7+ / 0-)

    I can't believe this is even a debatable topic at this point.  The question should be how much are we going to increase the PTC or find ways to expand it.  

    I wish it were possible to obtain a single amendment to our Constitution...taking from the Federal Government the power of borrowing. -Thomas Jefferson

    by fitz2 on Tue Jun 24, 2008 at 10:04:51 AM PDT

    •  Republicans want to do it on borrowed funds (0+ / 0-)

      Democratic Party wants to do it funded ...

      I think it sensible, at this time, to 'cave' with a promise to be coming back next January with legislation to recapture the full amount from the oil and coal industries.

      •  We're having a discussion about this funding (1+ / 0-)
        Recommended by:
        A Siegel

        issue and whether you are recommending that the Democrats go ahead and "cave" to the Republicans and pass this legislation with the funding via borrowing... OR whether we wait the 5-6 months until the new Congress to get legislation passed that effectively "captures from the oil and coal industries... diverting subsidies" and give us a five (5) year extension on the PTC.

        I would think stability is an issue in funding and the planning stages for continuity of these large scale projects.

        <div style="color: #a00000;"> Our... constitutional heritage rebels at the thought of giving government the power to control men's minds. Thurgood Marshal

        by bronte17 on Wed Jun 25, 2008 at 07:56:11 PM PDT

        [ Parent ]

        •  Personally ... (1+ / 0-)
          Recommended by:
          bronte17

          I think that a PTC commitment with borrowed funding (as much as I hate the borrowing) for FY09, or even just the first six months of 2009, with strong statements of commitment to the industry that there will be comparable legislation as one of the first items of agenda in House and Senate in January 2009, with targeting being on the next President's desk the Monday after inauguration.

    •  It's even worse than that (2+ / 0-)
      Recommended by:
      dotcommodity, fitz2

      not only does the late renewal of PTC kill wind installations in the US for a while, but it creates havoc worldwide for wind turbine manufacturers: imagine being in a heavy industry, requiring massive investment in production capacity, only to see 25% or more of your demand disappear overnight - and reappear 6 months later - with everybody in "urgent" mode.

      This almost bankrupted several of the manufacturers the last time round, and it makes then invest slightly less in production capacity, to avoid being caught again with useless capacity they have to pay for - this causes shortages for all others, increases prices worldwide and causes industry groxwth to be slower than it could be with a predictable regulatory framework.

      It's a nightmare for everybody.

      •  We need Big Wind (0+ / 0-)

        in order to compete. I can't believe the tiny amount of money the American Wind Energy Association spends lobbying. Couple thousand.

        These Electric Vehicles don't need gasoline: 2010

        by dotcommodity on Tue Jun 24, 2008 at 07:54:28 PM PDT

        [ Parent ]

      •  IT's not only the PTC but the FTC as well,.. (0+ / 0-)

        Federal Tax Credit is keeping a lot of small scale solar thermal off line as well. It's a matter of opinion as well but I'm looking at changing completely to Solar Thermal Installations for mid size rental buildings.  If the FTC were allowed I'd be 100% invested tomorrow, but right now for a system to pencil out it's going to take a Tax Credit to loosen up the wallets of the Rental Companies.

        A perfection of means, and confusion of aims, seems to be our main problem.- Albert Einstein

        by bldr on Wed Jun 25, 2008 at 04:20:36 PM PDT

        [ Parent ]

      •  Don't suppose we could get a diary out of you (0+ / 0-)

        about that subject?

        Explaining this more thoroughly.

        <div style="color: #a00000;"> Our... constitutional heritage rebels at the thought of giving government the power to control men's minds. Thurgood Marshal

        by bronte17 on Wed Jun 25, 2008 at 04:40:54 PM PDT

        [ Parent ]

  •  Pay as you go should apply to Iraq (11+ / 0-)

    not investments in America's future.

    We must invest in renewable energy now or face the consequences as James Hansen said. We have one year to act. There's no time for bullshit politics.

    We must act now.

    "It's the planet, stupid."

    by FishOutofWater on Tue Jun 24, 2008 at 10:05:36 AM PDT

  •  Fuel Cells Too (8+ / 0-)

    I'm in the stationary fuel cell business.

    Typically a megawatt sized fuel cell system running on biogas will take 10 to 15 months to complete.

    Because the tax credit renewal has failed in the Senate 5 times in the last 6 months and the bush admin is threatening a veto if it does pass, we have been unable to receive bank financing for a number of projects.

    The GOP is KILLING the alternative and renewable energy business in support of the subsidized coal, oil and nuclear energy all the while preaching the neeed for new technologies and energy independence.

    •  Reagan's removal of the solar panels (4+ / 0-)
      Recommended by:
      gmoke, nanobubble, JeffW, In her own Voice

      from the White House, which Carter had installed, was a powerful message about the GOP's energy policy, and it hasn't changed much since 1980. The diaries about Hansen today saying we have one year are all the more head-exploding when you realize we've wasted 30 years since Carter. These alternative energy projects shouldn't even be an issue, given the magnitude of the problem; like JFK and his moon shot, we shoulda declared it a national priority and invested. We subsidize Big Oil to the tune of billions and billions (as if their profits aren't enough), but the folks doing the right thing have to beg for peanuts. Aaaarrrrggg!

      "One cannot be pessimistic about the West. This is the native land of hope." Wallace Stegner

      by Mother Mags on Tue Jun 24, 2008 at 10:29:22 AM PDT

      [ Parent ]

      •  White House Solar (4+ / 0-)

        Carter put solar hot water heaters up.  Reagan took them down.  Clinton and Gore did nothing.  George W. Bush put up solar electric panels and his Texas ranch is a green building.

        The important point is not what goes up on the White House but what goes on inside.  Carter's policy was 20% of our energy from renewables by the year 2000.  We haven't had a real energy policy since then.

        Solar is civil defense. Video of my small scale solar experiments at http://solarray.blogspot.com/2006/03/solar-video.html

        by gmoke on Tue Jun 24, 2008 at 11:22:00 AM PDT

        [ Parent ]

        •  Hillary had a permanent PTC (0+ / 0-)

          in her clean energy policy at her site so Republicans can't keep turning back the clock. (So I think she learned how to legislatively one-up Republican obstructionism that did in her hubby and Gore.)

          Obama actually only made the PTC a 5 years extension in his plan.

          She offered a permanent 1.8 cents PTC so it would be predictable (while going down in value gradually with inflation.)

          I hope Obama adopts her real policy.

          These Electric Vehicles don't need gasoline: 2010

          by dotcommodity on Tue Jun 24, 2008 at 08:02:13 PM PDT

          [ Parent ]

    •  Can you attract some more venture capital (0+ / 0-)

      to help fund things?

      "Every day, the media go looking for an opportunity to paint a moon and stars over Obama's head and swoon at how they're making 'history' happen."

      by jqmilktoast on Tue Jun 24, 2008 at 11:06:19 AM PDT

      [ Parent ]

  •  Please Recommend (2+ / 0-)
    Recommended by:
    xopher, dotcommodity

    This is a problem our politicians can fix now.  The wind industry will be crippled by the failure to renew the PTC.  If you're serious about renewable energy, you should contact your reps to renew the PTC now.

    This is a well written and researched diary.  It belongs on the rec list.

    "Apes don't read philosophy." "Yes they do, Otto, they just don't understand it!"

    by WesClarkJr on Tue Jun 24, 2008 at 11:26:58 AM PDT

  •  Where is the legislation currently? (0+ / 0-)

    John McCain; more of the same Bush on Social Security

    by davehouck on Wed Jun 25, 2008 at 04:13:13 PM PDT

  •  Stuck in the Senate (0+ / 0-)

    Unable to get cloture. The bill number is H.R. 6049.

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