Friday, November 5, 2010

If Grants Eliminated - Solar Projects Will Slow

Solar, wind, geothermal and biomass power companies predict a slowdown in renewable-energy projects if Congress fails to extend a U.S. grant program during its post-election session.

The American Wind Energy Association, the Solar Energy Industries Association, the Biomass Power Association and the Geothermal Energy Association sent letters on Nov. 2 to lawmakers, pressing to extend the program that expires next month. The groups are acting before Republicans take control of the House next year after campaigning on a pledge to lower the federal deficit.

The industry organizations said the credits, which are part of the stimulus package, saved or created tens of thousands of U.S. jobs. White House officials said in an Oct. 25 memo that the grants had been “much more effective in promoting renewable energy” than a program to provide renewable projects with federal loan guarantees.

Letting the grants expire will lead to a “significant slowdown in the renewable-energy industries, resulting in the loss of jobs and further transfer of clean-energy leadership to other countries,” the groups wrote to congressional leaders.

Legislation to extend the grants has been introduced in Congress and may be tied to the debate over extending tax breaks enacted during the Bush administration, which are to end this year.

The Treasury Department has awarded more than $5.4 billion to 1,387 renewable-energy projects. The program lets solar, wind and renewable projects that would be eligible for production and investment tax credits instead seek a one-time grant from the Treasury covering 30 percent of costs.

Summers, Browner Memo

The White House memo, written by National Economic Council Director Lawrence Summers, special adviser on energy and environment Carol Browner, and Vice President Joe Biden’s chief of staff, Ron Klain, recommended that President Barack Obama ask Congress to redirect $2.5 billion in loan guarantee funds to extend the grants.

The advisers said opposition to the shift may come from House Speaker Nancy Pelosi, a California Democrat, and Senate Energy Committee Chairman Jeff Bingaman, a New Mexico Democrat. The memo was reported earlier today by the Wall Street Journal.

Bill Burton, White House deputy press secretary, said today in an e-mail that the administration supports the loan-guarantee and grant programs.

The renewable-energy groups cited a Lawrence Berkeley National Laboratory study from 2009 that found the grant program saved more than 55,000 jobs in the wind-energy industry. The report said most positions were short-term.

The Solar Foundation, a Washington-based non-profit group that promotes using the sun for energy, reported 93,000 employees in the industry, double the number estimated for 2009. The groups credited the grants for the increase.

Grants, Credits

The Treasury grants were added to the stimulus program at the behest of renewable-energy companies that said investment tax credits were failing to entice investors during the recession.

The White House memo said 2009 was the best year for the wind industry. Developers installed 10,000 megawatts of power that year. The Lawrence Berkley report said one-third of that capacity wouldn’t have been built without the grants.

U.S. wind-energy growth has slowed. The wind group reported Oct. 29 that developers added 395 megawatts in the third quarter, the slowest pace of growth since 2007.

AES Corp. Chief Executive Officer Paul Hanrahan said policy uncertainty would result in a shift in investments by the Arlington, Virginia-based company.

“We have scaled back our development efforts in the U.S. wind market in the near term,” Hanrahan said on a conference call today.

Renewable-energy companies also may have a more difficult time next year seeking support for the program when Republicans control the House. Lobbyists said subsidies for renewable projects will face greater scrutiny.

Grants ‘Toast’

“The tax-grant program, that’s toast,” said Michael McKenna, president of MWR Strategies, an oil-industry consulting firm in Washington. “There’s no way they can extend it. It’s going to be agenda item No. 1 for the wind and solar guys, but I just don’t see how that will happen.”

Dan Lashof, director of the New York-based Natural Resources Defense Council’s climate center in Washington, disagreed, saying both parties supported renewable power.

“I don’t think it’s obvious what the new Congress will do on renewable energy,” Lashof said. “Even Republicans that ran opposed to cap-and-trade said they support renewable.”


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