The Day After Solar Hangover

The sea change that occurred yesterday in the elections has the solar industry abuzz in speculation and trepidation. There is much analysis and a lot more guess work at play, but the political developments should focus the mind on what can be done.

The first clue is what the lame duck Congress will try to do. We already know that cap and trade is a nonstarter, but some remnants of an energy bill may be pushed forward before the new Congress convenes in January. Many solar industry analysts are watching for a particular piece of legislation known as the Treasury Grant program, which is now due to expire at the end of this year.

This program is key to developers who receive a grant in lieu of the 30% tax credit—so that they do not have to have any tax liability to receive the money from the federal government. The solar industry has been lobbying hard for an extension to this program, but that does not appear likely. A possible compromise may be reached to create a refundable tax credit so that investors in renewable energy products would still receive the 30% tax credit, irrespective of whether they have any tax liability. The major difference would be that they would have to wait until the tax season rolls around to receive their checks from the federal government. Even if this legislation does not pass, no one is running for the exits. The 30% investment tax credit is still good through 2016. But failure to extend the Treasury Grant Program will significantly slow things down, particularly for larger projects.

The new Congress will adopt a new vocabulary when talking about support for renewable energy. Few will try to talk in terms of reducing the threat of global warming. If Congressmen want to get anything done, they will frame their proposal in terms of creating jobs and boosting the economy. That is not such a bad thing as the US has lost its edge in manufacturing for the solar energy industry.