- Published: October 14, 2011
- Written by Chris Meehan
An important tool that’s allowed solar developers and developers of other renewable energy projects to gain access to the tax-equity market, the 1603 Treasury Program, is set to expire at the end of 2011.
But a new study by EuPD conducted for the Solar Energy Industries Association (SEIA) found that, if extended one year, the tax grant program will create more than 37,394 new jobs in 2012. As they enter into the double-digit months of 2011, SEIA and other renewable energy advocacy organizations will work to extend the program for one more year, said SEIA President Rhone Resch.
In the press conference, Resch called for an even playing field with stable tax credits for the renewable energy industries.
Other energy industries have enjoyed permanent tax credits that have helped spur their growth, he said.
“If you go back and look at the fossil fuel industry, it was 1916 that the oil industry received their tax credits,” he said.
Those credits, like credits established for coal in the 1930s and nuclear in the 1950s, remain in place, he said.
By contrast the investment tax credit for renewables was created in 2005 and extended through to 2016.
When the credit was created, the economy was in better shape and supported more tax-equity investments in ventures like solar projects.
As the economy sputtered and fell into recession in 2008, the market dried up. The 1603 program was created to ease access to the tax credit by allowing completed projects a quicker return from the Treasury when the project is completed.
It was originally set to expire at the end of 2010 on the hopes that the economy would have improved enough to open up the market. It hasn’t.
“The available tax-equity market in 2012 will be about 60 percent of [what it was in] 2007,” Resch said. “Since that timeframe the solar industry has tripled in size.”
Given the increase in the size of the solar industry, the tax-equity market now represents a much, much smaller portion of the overall solar market than it did in 2007, he said.
The solar industry now employs over 100,000 people and consists of 5,000 businesses, the majority of which are small employers, according to Resch.
“That's more than double the number of solar workers we had two years ago,” he said during a teleconference announcing the new study. “The 1603 program, plain and simply, has been the most effective policy in driving renewable energy deployment and job growth in the last two years.”
The report also looked at other scenarios such as extending the 1603 program for two years or for the full length of the investment tax credit that’s set to end in 2016. It found that a two-year extension could create 51,000 additional solar jobs in 2013 and a full extension would support an additional 114,000 solar jobs in 2015.