Legislation seeks to extend tax credits for the solar energy and other renewable energy industries.

Is coal, albeit cleaner coal, worth more to the government than the sun? It would seem so.

When Congress handed out tax credits in 2005 to spur development of cleaner sources of energy, legislators originally gave homeowners two years for tax credits to install solar equipment that would turn the sun’s energy into electricity or hot water. Those credits already were set to expire at year’s end, if Congress hadn’t tacked on another two years late in 2006.

Meanwhile, the original legislation gave energy companies eight years to take tax credits to build “clean” coal facilities.

Now a consortium of green and alternative energy companies is lobbying for new legislation to put renewable energy sources on a more even keel with traditional fossil fuels.

The Securing Energy Independence Bill, introduced earlier this year, would extend the various tax credits for commercial and residential solar installations for eight more years to further grow the industry.

Currently, less than 7 percent of energy consumed in this country comes from renewable sources, such as solar, wind, hydroelectric and geothermal. The rest of the pie mainly comes from fossil fuels and nuclear power.

To better compete with well-established sources, the renewable industry has always relied on tax credits. Today’s solar equipment is a far cry from what was installed in the late-1970s, but no one wants to replay what happened after similar tax credits ended in the 1980s, promptly turning the lights off for much of the U.S. solar energy market.

Rhone Reasch, president of the Solar Energy Industries Association, testified last April on Capitol Hill on the need to “establish parity” between congressional support for other power sources and solar.

The SEIA represents more than 500 companies, largely manufacturers of photovoltaic panel and thermal storage units. Reasch told lawmakers that long-term incentives are needed to convince the industry to invest in the U.S. market.

“Such an extension will provide the long-term market demand signal that solar energy needs to transition from a nascent market to a mature one,” he said. “New U.S. manufacturing facilities will not be constructed unless there is business and investor confidence that the U.S. marketplace will experience a long, steady and robust demand cycle for solar energy products.”

Reasch also pointed out that solar energy is unique from other renewable technologies since it is installed directly at homes and businesses - a characteristic that requires training for electricians, plumbers and roofers.

“The creation of an entirely new specialized workforce requires substantial time and expenditure by that industry that will not occur without long-term extension and improvement of the tax credit,” he added.

Legislative Background

  • The Energy Policy Act of 2005 created commercial and residential investment tax credits for solar energy systems placed in service from Jan. 1, 2006, to Dec. 31, 2007.

  • The Tax Relief and Health Care Act of 2006 extended the solar tax incentives to Dec. 31, 2008.

  • The Securing Energy Independence Bill would extend the solar credits for eight more years to 2016.