Wind and solar energy industries get some well-deserved credit from Congress

After the U.S. Congress extended the tax credit, renewable-energy business leaders were wreathed in smiles. (© AP Images)

In the U.S., experts predict a coming boom in renewable energy — particularly solar and wind — and not just because of world leaders’ recent resolve at the Paris climate summit. In December, the U.S. Congress extended tax credits that bolster investor confidence in the renewable-energy sector.

Business leaders are praising the congressional action, which extends investment tax credits and production tax credits for renewable energy that would have otherwise expired.

There was strong support among lawmakers for the 30 percent investment tax credit for the solar-energy industry and the 2.3-cent-per-kilowatt-hour production tax credit for wind-energy providers. These credits, which will phase out in five to seven years unless extended again, help renewable energy developers, manufacturers, installers and providers.

Other renewable-energy technologies, such as geothermal and hydropower, will enjoy a one-year extension of a 30 percent investment tax credit. Biofuels also will benefit.

Renewable energy creates jobs

The investment tax credit extension was hailed as “the most important policy development for U.S. solar in almost a decade” by Greentech Media Research’s MJ Shiao.

“With predictable policies now in place, we will continue advancing wind-turbine technology, driving down our costs and passing the savings on to American families and businesses in all corners of the country,” said Tom Kiernan, chief executive officer of the American Wind Energy Association (AWEA).

Leaders from energy companies across the board – Pattern Energy, Siemens, Berkshire Hathaway Energy, among others — echoed these sentiments.

“Having stable tax policy for these industries will provide predictable market conditions and enable them to grow, reduce costs and attract investment,” Business Council for Sustainable Energy’s Lisa Jacobson said.

Source: Council on Foreign Relations
Source: Council on Foreign Relations

The multiyear extension of tax credits gives solar- and wind-energy companies time to build up and widely deploy new technologies.

Already, the tax credits helped quadruple wind power since 2008, according to the AWEA, and boosted innovation in wind-turbine technology, which has caused installation costs in that sector to fall 66 percent in six years. The extensions will protect thousands of jobs and create many more. By the time the credits expire, analysts have said, some states will obtain cheaper energy from solar and wind than from conventional fossil fuels.

Boosting industry share prices

News of the tax-credit extensions drove up stock sales for solar power companies, including Solar City, SunEdison and SunPower, leaders in solar development, manufacture and installation. And Bloomberg New Energy Finance predicts that the extensions will add a whopping 20 gigawatts of solar and 19 gigawatts of wind power over five years, amounting to more than $73 billion of new investment.

The tax-credit extensions signal future investment in sustainable energy, President Obama told journalists. “You now have a global marketplace for clean energy that is stable and accelerating over the course of the next decade,” he said.