With “President Obama, Bipartisan Champions in Congress Save Jobs for Thousands in U.S. Solar Industry”, the SEIA (Solar Energy Industries Association) celebrated the “Successful Treasury Section 1603 Program Extended for One Year” thanking “our champions in Congress” without nary mentioning renewable industry partners such as the American Wind Energy Association which reciprocated the sentiment.
The SEIA had been seeking a 2-year extension of the Treasury Grant Program (TGP) “commence construction deadline” to December 31, 2012, while a certain Photovoltaic Blogger called for an extension through 2016. Also, the draft Cantwell-LeMieux Amendment to Extend the “Section 1603” Clean Energy Treasury Grant Program included provisions to expand TGP eligibility to non-profit power producers, the Tennessee Valley Authority (TVA), and real estate investment trusts (REITs), while exempting Investor Owned Utilities (IOUs) from normalization rules.
However, the final text of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 simply amends the year for the section 1603 begun construction and application paragraphs:
SEC. 707. EXTENSION OF GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS.
(a) In General- Subsection (a) of section 1603 of division B of the American Recovery and Reinvestment Act of 2009 is amended–
(1) in paragraph (1), by striking ‘2009 or 2010’ and inserting ‘2009, 2010, or 2011’, and
(2) in paragraph (2)–
(A) by striking ‘after 2010’ and inserting ‘after 2011’, and
(B) by striking ‘2009 or 2010’ and inserting ‘2009, 2010, or 2011’.
(b) Conforming Amendment- Subsection (j) of section 1603 of division B of such Act is amended by striking ‘2011’ and inserting ‘2012’.
The Energy and Clean Technology Alert “Congress Recharges Tax Incentives for the Clean Energy Sector” from Mintz Levin has a compact summary of the Tax Relief Act of 2010 including the Bonus Depreciation extension, also discussed at the DSIRE (Database of State Incentives for Renewables and Efficiency) Solar Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2012) webpage.
The single year TGP extension sets up 2011 to repeat 2010 without the benefit of the short runway provided by the Department of Treasury guidelines issued in July 2009.
Although I’ll wait until 2011 to state my formal photovoltaic predictions, I’ll tease two TGP predictions in advance.
1) The SEIA will spend most of 2011 seeking a second year extension of the TGP through 2012; the SEIA Treasury Grant Program (TGP) webpage has already been updated and continues to state:
2) A Non-Residential Photovoltaic applications rush will occur in the second quarter of 2011 mirroring the California Non-Residential Application spike in April 2010 I blogged about in California Non-Residential Solar installs lag.
The late year extension of the TGP has already disrupted photovoltaic project development pipelines contingent upon grants instead of tax equity. However, the December 31, 2010 “Begun Construction” eligibility requirements should contribute to strong completed photovoltaic installations in the first half of 2011.
Make no mistake, the 1-year TGP extension is just a reprieve for the US Solar industry from complete reliance on tax equity to leverage the benefits of the ITC (Investment Tax Credit), and single year policy extensions will not foster long term, stable solar growth.
Best Wishes for the Holidays and continued solar success extension in 2011.