With the news full of failing banks, dried-up credit and falling stock markets, it’s no shock that people are afraid about what’s ahead, entrepreneurs included. And yet even in the midst of all this, the opportunities ahead are bright for green businesses providing renewable energy.
In a recent post, I outlined the non-financial sections of the “Emergency Economic Stabilization Act of 2008” fully expressing my frustrations. But there are always two sides of every coin. Perhaps the silver lining in the “bailout cloud” was an extension and expansion of tax credits for renewable energy. The impact of the $700 billion bailout remains uncertain as this point, but the impact of these incentives for renewable energy is likely to be huge, helping to solve our financial problems, our climate problem, and our energy problems at the same time.
The bill provides for an eight-year extension of renewable energy investment tax credits covering up to 30% of the cost of solar power projects for homes or commercial sites. The short time frame of these tax credits in the past, and their frequent expiration from year to year have created enough uncertainty to dampen long-term growth. Eight years is long enough to allow for long-term planning, and encourage long term growth.
Along with the extension of the credits, the $2000 cap on the tax credit for residential systems has been removed. With a residential system of $30,000, the tax credit will be $9000 in 2009 rather than being limited to $2000 as before. While a large percentage of the solar market has been limited to states like California that have provided the most generous state-level subsidies, removing the cap will greatly expand the market for solar power across the country.
Distributors and installers will see opportunities expand nationwide. A recent study by Navigant Consulting found that extending these credits will create 440,000 jobs, contributing to the growth of green collar jobs, and these numbers did not include the removal of the cap.
Other renewable energy technologies will also benefit from the measures in the bill, including small wind, geothermal, fuel cells, and ocean (wave/tidal) energy. The measure allows utilities to take advantage of the investment tax credit as well, removing another restriction, and allows clean energy bonds to be created to support the creation of renewable energy production.
As renewable energy continues to grow and its costs fall, it’s becoming increasingly competitive with power from other sources like coal. These tax credits will help to get us there. We’re not out of the woods yet by a long shot, but these moves to a greener economy may help us dig our way out.