Solar Tax Credits Introduced in Congress
by Andy Kollmorgen, RenewableEnergyAccess.com News
April 27, 2006
Washington DC- As lawmakers in the nation's Capitol scramble to
confront record energy prices, legislation was introduced in Congress
this week that could have a lasting impact on the renewable energy
market in the U.S. - particularly for solar energy. The "Securing
America's Energy Independence Act," calls for extending the
solar tax credit for eight years and for changing the credit cap
from $2000 per system to $2000 per kilowatt. The credit will apply
to solar systems and cells.
Last year's Energy Policy Act of 2005 provided a 30% tax credit
for solar systems purchased for both residential and business applications.
However, these credits will expire next year without legislative
remedy, a term too short to encourage significant industry growth
say many experts and industry representatives. A long-term extension,
they say, is essential to reducing
the cost of solar energy, as it would create market conditions that
allow solar companies to make investments and drive down costs through
economies of scale.
Though the bill is unlikely to pass through the legislative process
without modification, high gasoline prices, environmental concerns,
and a growing awareness of the looming worldwide energy crisis have
created a political atmosphere in which renewable energy initiatives
are attractive to lawmakers, said Rhone Resch, President of the
Solar Energy Industries
Association (SEIA). An eight-year extension of the original two-year
solar credit, which was enacted by the Energy Policy Act of 2005,
will have a pervasive effect on the U.S. solar market, said Resch.
"An eight-year extension will allow the U.S. to reclaim leadership
as the number-one market for photovoltaics, and I think it would
allow us to be competitive in solar thermal. It would also, without
question, solidify the U.S. as the biggest marketplace for concentrating
solar," said Resch.
The bill was introduced in both the House of Representatives and
the Senate (H.R. 5206 and S. 2677, respectively). The main sponsors
are Senators Gordon Smith (R-Oregon) and Robert Menendez (D-NJ),
as well as Reps. J.D. Hayworth (R-AZ) and Michael McNulty (D-NY).
Numerous other lawmakers agreed to co-sponsor the bill, bringing
the total support up to nine Senators and 23 Representatives. The
House and Senate bills include the following
Residential Solar Tax Credit: Extends a 30-percent tax credit,
created in the Energy Policy Act of 2005, for the purchase of residential
solar water heating, photovoltaic equipment, and fuel cell property.
Changes the maximum credit to $2,000 for each kilowatt of capacity
for solar equipment and $1,000 for each kilowatt of capacity for
fuel cells. Credits may be taken
against the alternative minimum tax. Expires after December 31,
Business Solar Tax Credit and Fuel Cell Tax Credit: Extends a 30-percent
business credit, established in the Energy Policy Act of 2005, for
the purchase of fuel cell power plants, solar energy property, and
fiber-optic property used to illuminate the inside of a structure.
Credits may be taken against the alternative minimum tax. Expires
after December 31, 2015.
Despite a tight federal budget, Congress is under pressure to help
fund alternative energy sources for Americans.
"This is one of the few tax credits that consumers can utilize
to reduce their energy bill. I think as we get mired deeper into
the oil crisis and the electricity crisis this summer, there will
be a lot of pressure on the Hill to pass legislation that is consumer
focused," said Resch. "This will
really help those who are on the fence to decide to install solar
on their homes."