Solar Makes Case For 1603 Grant Extension

on October 18, 2011 at 10:30 AM

The leading U.S. solar-industry lobbying group says a tax provision that expires at the end of this year will create some 37,000 additional jobs in 2012 if it is extended by Congress. And if it’s not? In a press conference, Solar Energy Industries Association (SEIA) chief Rhone Resch said killing the Section 1603 Treasury Program “would essentially amount to a massive tax increase … that would reduce jobs significantly.”

The 1603 provision allows renewable energy developers to receive a grant for up to 30 percent of the cost of a project, once it goes online, in lieu of claiming an energy tax credit. The grant option was instituted for two years in 2009, as the financial crisis froze up tax equity markets. After heavy lobbying late last year it was extended through the end of this year.

“Late year, Congress made the right decision to extend the program through the end of 2011, and as we enter the fourth quarter of 2011, it’s clear the tax equity markets haven’t recovered,” making an extension vital, Resch said.

The 37,000 job growth estimate – 37,394, to be precise – was contained in a new EuPD Research report [PDF] commissioned by SEIA. The report said that overall, the 1603 provision “has supported more than a thousand solar projects representing over $3 billion in total investment, contributing to a nearly two-fold increase in solar electric capacity in 2010.” The provision has also been leaned on heavily by wind developers, as well as other renewable energy developers, who no doubt will be mounting their own lobbying campaigns in the months ahead.

Solar has taken some hits in the wake of the Solyndra bankruptcy, but Resch pointed out that Solyndra was supported through a very different program – and that Congress should back what he cast as a uniquely successful American industry during a time of economic struggle.

“More than 100,000 Americans work in the solar industry, double the number in 2009. Solar is a proven job creator at a time when the unemployment rate for the country remains stubbornly high,” Resch said. “The 1603 Treasury Program has been the single most effective policy driving renewable energy growth during the past two years.”

Resch argued the 1603 provision is necessary for renewables to compete with subsidized fossil fuels, and is essentially cost-free to taxpayers, since the grants are simply displacing tax credits that were “fully paid for” when the Section 48 Investment Tax Credit became law in 2008 under President George W. Bush.

Ideally, Resch said, the provision would be extended through 2016, allowing industry members to map out long-term investment and development strategies. According to the report, a “five-year extension will push the U.S. employment supported by the solar energy industry to almost 114,000 over baseline, including 55,000 direct & indirect solar workers.”