Renewable Investment Hinges on Tax Credit Extension

The production tax credit and investment tax credit that create demand for solar, wind and other renewable energy projects must be extended to prevent disruption in existing and planned projects, according to a group of 500 company executives.

The American Council On Renewable Energy (ACORE) sent a letter to the majority leaders of both bodies of Congress asking for the tax credits that are due to expire at the end of the year to be extended by March 1. The letter says companies are reluctant to invest in projects that require several years to complete if they are not certain that the tax credits will be available several years into the future.

As with all energy markets and in plans for growth in any businesses, certainty and continuity in public policy provides the confidence needed for stability in investments. We must ensure we are not creating an environment for boom and bust cycles in renewable energy and that we are not tying the hands of business owners in the sector looking to scale their technologies to meet demand and price points.

ACORE warns that unless the tax credits are extended now, 42,000 megawatts of renewable energy projects in 45 states could be at risk of cancellation.

Because of the time needed to develop these projects, the tax credits would not add to the deficit 2009's record $3.1 trillion federal budget because they would not be claimed until at least 2010. ACORE says that even then the projects will be a tax revenue generator because of the jobs created and goods consumed in the process.

The March 1 deadline is a few days before the Washington International Renewable Energy Conference that is being sponsored by ACORE as well as the U.S. State Department.

The investment tax credit enables companies write off a portion of the money spent on the projects while the production tax credit is tied to the amount of electricity generated.

The tax credits were included in proposed energy legislation last year, but were taken out of the bills that eventually passed in December of 2007. The tax credits contributed to investors spending $2.6 billion on clean technology companies last year.