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A Lifeline for Renewable Energy at Stake

Image has not been found. URL: /wp-content/uploads/2008/10/solar-panels.jpgSolar panels (Flickr: Chandra Marsono)

Dennis Markatos-Soriano has been worried. And so are, probably, the hundreds of thousands of other workers in the renewable-energy sector.

Markatos-Soriano, an employee of Carolina Solar Energy, and his fellow clean-energy workers could lose their jobs if the existing federal tax credits for wind and solar energy companies are allowed to expire. He works as a campus outreach coordinator for his company, which distributes solar power.

On his blog for the public-radio business show “Marketplace,” Markatos-Soriano echoed the fears throughout his industry. In a post titled “Congress: Please save my Main St. job, not that fat cat’s Wall St. job,” he wrote:

I got that call today.

The one no one wants to hear from their CEO — that it’s possible the company I work for will run out of money for my part-time position and have to let me go. But, unlike some investment bank officials who got a similar call, our solar energy company didn’t do anything wrong.

We are just prisoner to the waiting game that Congress keeps us in by not renewing the green energy tax credits that help our country deal with the energy crisis…And now many members of Congress are instead considering bailing out a financial industry that has acted recklessly and twisted rules to gain tremendous, unsustainable profits.

Science.jpg
Science.jpg

Illustration by: Matt Mahurin

But last night, the Senate tacked the renewable energy bill extending the tax credits onto the $700 billion financial bailout plan that congressional leaders hope to pass by the week’s end. Leaders in the Senate voted to pass the bailout bill, along with the tax credits for solar and wind power. Now the entire package is scheduled for a vote by the House on Friday.

All year, the Senate and the House have been battling with different versions of this tax bill.. This week is the last chance for Congress to save the green economy from an uncertain future, according to employees and representatives of the solar and wind industries.

If the tax credits aren’t renewed, 116,000 jobs and $19 billion in private investment could be lost through 2009 (pdf here). With the country’s economy faltering, unemployment rising and energy prices wildly fluctuating, representatives of the solar and wind industries say they would be surprised if lawmakers let a “bright spot” in the economy fall to the wayside.

There’s been a lot of talk about creating green jobs this election cycle. But the reality is that many such jobs already exist because the renewable-energy industry is rapidly growing.

Solar installations grew by 40 percent in 2006, and by an additional 40 percent last year. And wind-powered generating capacity jumped 45 percent in 2007.

According to green workers and trade associations, this growth is the product of the federal tax credits for renewable energies. Allowing the credits to expire. they say, would result in huge layoffs, strain the budgets of green companies or put them out of business.

Markatos-Soriano talked to TWI about the fate of his job at Carolina Solar Energy. He works with universities in North Carolina to hook them up to solar-powered electrical grids at no cost to the institutions.

“We’ve used a financing model that includes the federal tax credit and other incentives to sell electricity directly to the grid,” he said. “So, my job is definitely at risk.”

As for his company if the tax credits went away?

“It would have to get creative,” he said. “I had a conversation with the CEO last week, and [he wanted to push ahead] but the business model is really set to work with tax credits.”

Carolina Solar isn’t the only company running into problems because Congress has not renewed the credits. A solar installation company in Revere, Pa., lost a $300,000 project, according to the Solar Energy Industries Assn., or SEIA, the industry trade association.

In Merrimack, N.H., one of the world’s largest manufacturers of solar-panel equipment told SEIA, according to the trade group’s report, that it would build its next factory in Asia if the tax credits expire.

And in San Diego, Calif., a solar company estimated that its revenues would drop by $60 million in 2009, and $90 million in 2010, if the tax credits die. The company told SEIA that it would have to lay off about 30 workers, starting in 2009, and postpone plans to expand its workforce by 30 to 55 employees. (SEIA did not publish the names of these companies in its study — pdf here.)

SEIA spokeswoman Monique Hanis said in an interview that she and her colleagues were astonished that it had taken Congress so long to extend these tax credits — it has been in the works for almost two years — since they face little opposition from either Democrats or Republicans. “Honestly, we are really surprised,” said Hanis. “We saw huge momentum in both chambers [of Congress]. …. There’s huge public support to move into renewable energy — and solar in particular.”

There’s another reason Hanis is surprised: The renewable energy bill that would prolong the tax credits “won’t cost the government anything” because the bill includes revenue offsets. House and Senate Republicans introduced incentive provisions that are expected to generate enough revenue to offset the $70 billion in tax credits.

Some solar companies have told SEIA that they would move their factories and jobs overseas if Congress fails to act. That would hurt the global competitiveness of the U.S. renewable-energy business.

“[The industry] is sort of on the tipping point of really expanding with a lot of investment from global companies,” Hanis said. “[Renewing the tax credits] would signal to global investors that the U.S. is committed to renewable energy.”

The American Wind Energy Assn. paints a similar picture for the wind-power industry if the tax credits for wind energy expire.

All the new projects planned for next year would be “in limbo,” says AWEA spokeswoman Christine Real de Azua. “Come January,” she said, “new projects will come to a full stop, with construction jobs stopping, contracts being on hold, and increased costs for the companies. And with each month that goes by, things will get worse and worse.”

Real de Azua says such a bleak scenario is not far-feteched. When the credits were allowed to expire in 1999, 2001 and 2003, “new [wind] installations declined by as much as 70 to 90 percent in the following year.”

But not everyone thinks that the end of the tax credits would be the end of the world as far as wind and solar energy is concerned. A wind-turbine-blade manufacturer for General Electric told The Wall Street Journal’s Keith Johnson that the industries will likely roll with the punches.

Richard Morrison, chief executive of Molded Fiber Glass Companies had this to say:

The failure of the U.S. Congress to extend the production credit is not a good thing. Now how bad of a thing is it? It’s hard to predict because things are a little bit different now in 2008 than back in the 1990s when it was a fledgling industry. There is a real business here and a big business and a growing business.

For one thing, according to Morrison, the cost of wind-turbine technology has come down. For another, states will continue to provide incentives even though the federal government doesn’t.

Dept. of Energy solar expert Peter Wong, who works in the agency’s Energy Information Administration, agrees that state incentives would be key in sustaining renewable-energy businesses if the credits aren’t renewed.

“I would say that the industry is not going to collapse because there are still some state incentives in place,” Wong said. For example, solar and winds programs in California and Texas are bolstered by significant state incentives.

In addition, he says that the absence of the federal renewable energy tax credits could drive companies to develop more efficient technology more quickly to bolster their bottom lines.

Opponents in Congress have another reason for voting against the tax-credit extension. During negotiations in June, Senate Minority Leader Mitch McConnell (R-Ky.) argued that the tax credits for wind and solar power won’t reduce the cost of gasoline because it doesn’t focus on increasing the country’s oil supply. “This bill isn’t a serious response to high gas prices,” McConnell said. “It’s just a gimmick.”

Many people working in the renewable-energy industry say companies won’t require tax credits forever–they are just short-term insurance to sustain the boom.

“Solar will get better,” said Markatos-Soriano. “But at this point, the technology needs a boost from federal and state policies that can help [the companies] grow — not only to provide a great deal of energy and reduce the use of fossil fuels but to provide good jobs.”

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