Solar industry pushes tax credit extension

By ROSALIE WESTENSKOW, UPI Correspondent   |   July 3, 2008 at 9:30 AM   |   Comments

Solar energy could provide a substantial amount of the nation's electricity if Congress extends federal tax incentives, industry representatives told senators Wednesday.

The potential for solar to green the nation and wean it from foreign oil is huge, particularly Concentrating Solar Power, witnesses at a Senate Energy Committee hearing said. CSP uses mirrors to concentrate sunlight, creating an intense heat that produces electricity by driving a generator.

At a time of skyrocketing oil prices and growing concerns about climate change, the sun provides a promising alternative, said Alex Marker, research fellow for SCHOTT North America, a company that produces equipment for solar energy power plants.

"In just one hour's time, the amount of energy that the sun shines upon the Earth's surface exceeds the energy consumption of all of mankind in an entire year," Marker told senators. "Solar energy is relevant for almost every country in the world, especially the United States, where conversion of only 2.5 percent of the nation's usable area into solar farms would satisfy the entire nation's energy needs.

Utility companies and the public have shown increasing interest in this technology, and 400 megawatts of CSP are already being generated in the Southwest. A number of companies plan to build CSP power plants in the near future. Studies project this growth will lead to more competitive prices, said Charles Andraka, a member of the technical staff at Sandia National Laboratories in Albuquerque, where the hearing was held.

"The current cost of electricity generation by CSP trough plants is about 16 cents per kilowatt-hour," Andraka said. "With further technology development and increased deployment, the cost of CSP-generated electricity is projected in several studies to reach 6 cents per kilowatt-hour."

However, this progress may stagnate before CSP ever gets off the ground if Congress doesn't extend current tax incentives, witnesses at the hearing said.

"Without the eight-year extension of the (solar) investment tax credit, this industry will be stopped dead in its tracks," said Fred Morse, senior adviser of U.S. operations at Abengoa Solar, a solar technology company that announced in February its plans to build the world's largest solar plant in Arizona. "The contracts (for new plants) will not go forward without the ITC. My company has one, and we can't get it financed without the ITC."

Legislation currently in the Senate would extend the ITC for eight years as part of the Energy Independence and Tax Relief Act. However, the bill was filibustered when introduced on the Senate floor on June 17. An attempt to end the filibuster with a cloture vote, which requires 60 votes in favor, failed 52-44.

However, solar industry advocates say they expect to see the bill come up again soon, including Jared Blanton, spokesman for the Solar Energy Industries Association, a trade organization.

"The Majority Leader (Harry Reid, D-Nev.,) currently has control of the bill," Blanton told United Press International. "He's indicated he plans to bring it up for another cloture vote after the Fourth of July."

If the bill garners enough support to invoke cloture, the Senate will then debate it on the floor.

The stalemate over the ITC extensions mirrors the current deadlock in Washington over a number of energy policies. In early June a comprehensive climate-change bill died on the Senate floor after a week of filibustering, cloture votes and general finger-pointing by both sides.

Sen. Pete Domenici, R-N.M., said he's frustrated by the political impasse on an issue that demands immediate action.

"We Republicans act a certain way … and Democrats act another way, and we don't get anywhere," Domenici said at Wednesday's hearing. "The huge amount of money we send overseas (for oil) is unbearable. We can't wait around for something to happen."

Meanwhile, without a long-term ITC, businesses are having a hard time convincing investors to ante up for expensive solar power plants, said Ken May, division director at Abengoa Solar in Colorado.

"These are huge, huge projects," May told UPI. "To build something you need to know what the economic environment will be when it comes online."

Currently, the tax credit is 30 percent, which effectively reduces a solar power company's federal taxes by 30 percent. However, it's scheduled to drop to 10 percent at the end of the year.

"Obviously, that's a huge difference and the economics of these projects are written under the assumption of a 30 percent credit," May said. "So if the tax credit isn't extended, there's a possibility those plants won't be built."

Another roadblock for new solar plants is the application process, said Sen. Bernie Sanders, I-Vt. Sanders expressed concern over a recent announcement by the Bureau of Land Management, which approves plant proposals on public lands, that it was placing a temporary moratorium on new applications while it processed the 125 already in the system. Sanders also said the number of people working on processing the applications is unacceptably low.

"To my knowledge, none of these (applications) have been approved," he said. "That's because, in the middle of this crisis of global warming, we have a bottleneck with two guys sitting there trying to process these applications."

Shortly after Wednesday's hearing, the BLM announced it would once again be accepting applications. The bureau has a commitment to renewable energy, and Sander's characterization of the application-approval process is inaccurate, said Matt Spangler, spokesman for the BLM.

"We have three key staffers in Washington working on the applications, plus a program lead and a variety of resource specialists in each state office," Spangler told UPI.

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