Section 1603 extension marks another renewable energy victory

2010 has seen a number of efforts by renewable energy developers to position renewable energy as a bigger power player. Renewable energy proponents fought for the defeat of Proposition 23 in California during the November election. And most recently, renewable energy advocates gained the extension of Section 1603 (Treasury Grant Program).

Shortly before midnight on Dec. 16, the U.S. House approved the passage of a tax bill that includes a one-year extension of the grant program. The program was created by the American Recovery and Reinvestment Act (Section 1603) to provide commercial solar installations with a cash grant in lieu of the 30 percent solar investment tax credit (ITC). The extension was heralded by groups like the Solar Energy Industries Association (SEIA) and the American Wind Energy Association (AWEA).

“It took a year of tireless effort from the entire solar industry and our champions in Congress to get an extension of the 1603 program,” said Rhone Resch, CEO of SEIA.

“The inclusion of renewable energy in the tax bill is a clear indication of strong bipartisan support for the wind industry,” said Denise Bode, CEO of AWEA.

Renewable energy projects that start construction before Dec. 31, 2011 will receive a 30 percent cash grant. Since many renewable energy developers were in a holding pattern until the decision to “extend or not to extend” was made, some projects that were scheduled to start by the end of this year are now being corralled.

Borrego Solar, a developer based in San Diego, Calif., has benefitted from the increasing industry interest in solar investments bolstered by the Treasury Grant Program. Mike Hall, CEO, said the one-year extension is a relatively small victory but will allow projects more time for “baking.”

“I don’t think there will be a lot of projects that will fall out. This guarantees that the solar industry will grow in 2011 and 2012.”

Maria Schnitzer, director of solar services for AWS Truepower, a wind and solar forecasting company, said recently the company has seen continued activity in preconstruction site assessment, although it is “not as strong as in years past for wind.” However, activity in solar forecasting is increasing, she said. As a result of the Treasury Grant Program extension, Schnitzer said she expects to see more business in long term forecasting for the preconstruction phases and operational assessments for projects that are already in the ground.

The extension of the Treasury Grant Program is a victory with a bittersweet ending for most developers, as longer term extensions are needed to provide greater stability to the market.

“We would like to see a permanent commitment to renewable energy policy in the U.S.,” Schnitzer said.

“While the one-year extension is great, we need to find a longer extension,” Hall said.