Yesterday, in addition to passing the once-doomed Emergency Economic Stabilization Act of 2008, otherwise known as "the bailout," the Senate and House did a very good thing: Lawmakers extended and modified the federal investment tax credit for residential and commercial solar energy development. Such tax credits, originally enacted in 2005, are generally recognized to be essential to help the younger industry compete against the (readily subsidized) coal, nuclear and oil industries, and to allow increased competition to drive solar products down the cost curve.
The industry has been thirsty for a show of government support for the many months during which the 30 percent tax credit was set to expire; the long, uncertain flirtation threatened the 60,000 people working in the solar industry, $230 billion in investments, and to reverse the doubling of solar electric capacity achieved between 2006 and 2007. Foot-dragging may even have artificially depressed US market demand during that time, sending big solar companies to nations like Germany, which has passed 20-year supports for sun energy. For those in the know, winning this extension--to last eight years, no less!--has been a hard slog. So when the bailout news broke, Wall Street may have been merely relieved--but Silicon Valley, incubator for some of the most exciting solar breakthroughs, was reportedly in full swoon:
Some executives hauled out Champagne. Solar power advocates in San Francisco threw an impromptu party at a downtown bar.
"It's a fantastic day for the renewable-power industry," said Julie Blunden, vice president for public policy at SunPower Corp. of San Jose, after picking up a bottle of bubbly. "This is one of those few times when you can tell you're at a turning point."
Though the bailout ended up with a less than desirable number of legislative hangers-on (cf. the arrow-factory earmark that 337 members of Congress felt was necessary), this was a crucially important addition, geared at stopping the number of new solar projects from plunging, Dow-style, over the next several years, and to keep the notion of green job creation viable as the country's unemployment numbers tick up. A one year production tax credit also applies to other energy sources such as geothermal, biomass, hydropower, and wave energy--a new category. The only snag: Tax breaks for wind production were only extended for a single year. So although an encouraging amount of track has already been laid, we may be fighting this battle all over again in 2009.
--Dayo Olopade