Part II of Tax Credit Extension Study Gets Legislators’ Attention

The conclusions of a six-month-old report on the damage to the PV and wind industries expected to be caused by expiration of tax credits in 2009 have recently been updated to show the other side of the coin.

The initial study, Economic Impacts of the Tax Credit Expiration, was commissioned by the American Wind Energy Association and the Solar Energy Research and Education Foundation, and performed by Navigant Consulting of Burlington, MA.  In summary, the study found that expiration of the federal production tax credit (PTC) for wind energy and the federal investment tax credit for PV could lead to some 116,000 lost job opportunities and $19 billion in lost investment in 2009.  These figures have been widely publicized since the report’s publication, and have been used by some Congressional legislators to gather support for their repeated attempts to extend the tax credits into 2009 and beyond.

Both types of tax credit are intended to act as incentives: in the case of the PTC for developers to create large-scale facilities such as wind and ocean energy farms, and in the case of the ITC for businesses and individuals to invest in solar power, energy efficiency, etc.

This month the Navigant report has been updated to show the potential extended effects on the American economy up to the year 2016, assuming the existing tax credits (30%, capped at $2000 for residential solar systems) are kept in force.  And if Part I of the study did not get the attention of enough Congresspersons to make a difference, Part II certainly should.  Here are some of the salient observations from Part II on the projected effects of ITC extension:

• 19,000 MW of additional solar energy installations (PV, solar hot water and CSP) by 2016;
• $232 billion of additional investment (mostly in U.S. manufacturing and construction) by 2016;
• an additional 276,000 jobs (for a total of 440,000 jobs) by 2016.

The writers of the report make the important point that these projections assume a full, one-time, 8-year extension of the ITC, not several 1-year or 2-year extensions, which would not stimulate the market to the same extent.  And it’s interesting to note that the drafters of the current Senate ITC Extension bill have recently upped the extension period from 2 or 4 years to the full 8-year figure.

Now all they have to do is get it past House, Senate and the White House in the next week……