| Independently Powered Energy News

The renewables industry and a group of economists are offering options to keep non-fossil fueled projects for electricity alive amid an increasingly severe economic downturn. Financing options started being floated after federal lawmakers extended the federal renewable tax credit this fall. That federal financing backstop may have come too late because of the national economic crisis. The financial malaise makes it difficult for companies making little profit to take advantage of the tax credit. The extension of the renewable energy investment tax credits gives financial institutions a tax break on money they put into wind, solar and other renewable projects. However, banks and other institutions have to show profits against which to take the credits. In the last few months, profits have dropped precipitously. To address the resulting economic shortfall for renewable energy as corporate profits sink, rendering tax credits of little value, the wind industry is seeking to make the federal production tax credit more flexible, said Nancy Rader, California Wind Energy Association executive director. The idea, she said, is to seek modification of the credit, enabling its value to be used directly through a cash refund rather than having to be applied against taxes, and/or to offset the alternative minimum tax as with the investment tax credit for solar power. This would go a long way toward addressing the current market problems, she said. The wind industry wants federal lawmakers to make the tax law change as part of economic recovery legislation expected to be introduced when Congress reconvenes in January. Municipal utilities may line up behind federal cash payments for renewable energy projects too, according to one muni source. Since they do not pay taxes, the credits are of no value to munis pursuing renewable energy. Mike Ahearn, First Solar chief executive officer, called for the federal government to set a price signal for carbon-based energy that would help level the playing field between fossil fuel power and renewable power. Otherwise, he said, renewable energy companies are undercut when volatile oil and gas prices dip. In Washington, a group of labor leaders and liberal economists released a plan December 9 calling on Congress and President-elect Obama to enact a massive federal economic stimulus program. The plan, released under the auspices of the Institute for America’s Future, calls for the federal government to spend a minimum of $900 billion to boost the economy over the next two years, with $100 billion earmarked for green energy projects. The federal government would direct the money in a strategic fashion, said Campaign for America’s Future co-director and economist Robert Borosage, “rather than just tax breaks for business.” Borosage, who said the plan closely mirrors what Obama backs, said that without greater federal support for green energy the outflow of U.S. funds to foreign nations for oil will undercut economic recovery once it begins. Oil is expected to rise in price when the economy grows again. The plan--heavily backed by organized labor, university economists, and a wide array of progressive public interest groups--calls public led green investment “a first priority.” “We’re not talking about a one trick pony economic stimulus,” said Leo Gerard United Steelworkers international president, “but economic renewal.”

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