Major renewable energy associations are cranking up the heat on Congress to renew a federal cash grant program that expires at the end of this year.
The latest salvo fired came today from the American Council on Renewable Energy, which warned that 104,000 U.S. jobs are at risk if the program is not renewed. In danger is a Treasury grant program that covers up to 30 percent of the cost in cash rebates of alternative energy projects. Industry associations have warned that 15,000 wind jobs are at risk if the program isn’t extended, and that 2,000 megawatts of solar energy slated to come online in the U.S. could be cut to just 800 megawatts if supports expire.
In California, the looming deadline — and uncertainty of whether or not the program will win renewal — has set off a race to approve solar projects before the end of this year, leading The New York Times to question whether some risky ventures are getting clearance in the scramble.
It’s no secret that cleantech relies heavily on the government for support, whether that’s in the form of subsidies, tax credits or massive conditional loan guarantees that have been granted to solar companies like BrightSource and Solyndra. At hand is the question of whether or not other sources of funding for renewable energy projects will be enough to make up for the shortfall in investment.
Nope, says Lux Research analyst Matt Feinstein — by his firm’s calculations, there’s not enough tax equity on the market to make up for the predicted shortfall in government support. Given that the U.S. is a big market for solar and that Germany — the world’s largest market for solar — has recently began cutting its generous subsidies, companies may have to turn to Asia and emerging renewable energy countries for business.
“The (solar) industry as a whole is 100 percent reliant on subsidies, and this is by far the best one,” Feinstein said. “If the grant is just not extended and we stay without it, that’s a huge blow.”
Solar developer Silverado Power CEO John Cheney doesn’t see the situation as so dire. His company recently won a deal with Southern California Edison for 113 megawatts’ worth of solar power.
“There is absolutely no shortage of money worldwide, nor in California. It’s the difficulty of getting projects done and the lack of speed and the lack of policies that are being implemented,” Cheney told me last week. He agrees with Feinstein’s assessment that there’s not enough tax equity on the market and that the expiration of the program would cause “momentary shrinkage” in funding sources, but argues that the supply of tax equity financing in the U.S. is building back up.
Residential solar company Sungevity CEO Danny Kennedy says that the program helps solar in increasing the supply of available capital.
“While not fatal to the industry, the cash grant issue is important for us achieving our potential,” Kennedy said. He echoed the argument made by many in cleantech that renewable energy needs long-term, stable policies in order to thrive.
Silverado’s Cheney also adds that the endangered grant program has helped more wind projects than solar.
“Wind was the largest beneficiary and now is a bit under water with hundreds of stranded projects in the U.S.,” Cheney said. “Solar is not dead at all and in fact is growing rapidly.”
One wind expert has been advocating for smaller, less ambitious wind projects to keep the wind waters churning — R.J. Lyman, a partner at law firm Goodwin Procter and former Massachusetts assistant environmental secretary. Lyman asserts that there will always be governmental support in some way or another for wind energy.
“I do not happen to believe there is a major risk of a catastrophic collapse,” Lyman said. ‘”The government has been trying to feed everybody steroids. We appreciate that, but you can’t do that forever.”
Residential solar company SunRun CEO Edward Fenster is advocating for the Treasury grant program’s renewal. He estimates that an extension of the grant program would allow his company to create 6,000 jobs and build 36,000 more residential solar installations — and currently allows SunRun to charge three cents per kilowatt-hour less for solar-generated electricity than it would otherwise.
[Image via Flickr/waffler]
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