Economic recovery package extends existing renewable energy tax credits for eight years, and Includes new credits for geothermal heat pumps, and combined heat and power systems.

Photo courtesy of Rheem

The U.S. House of Representatives passed the revised Emergency Economic Stabilization Bill of 2008 Oct. 3, and President George W. Bush signed the legislation into law soon after. But banks weren’t the only ones breathing a sigh of relief; proponents of energy efficiency and renewable energy manufacturers were as well. The bill also contained measures to extend existing renewable energy investment tax credits (ITCs) for an additional eight years, and expanded them to include other critical technologies in the renewable energy marketplace.

“I think it was a stroke of political genius to incorporate the [energy tax credits] into the emergency stabilization bill,”Dan Ellis, president of Climate Master, toldPM. For the past 18 months, Ellis has been traveling to Washington, D.C., conducting congressional member meetings to convince legislators to not only extend the existing ITCs, but to include other renewables as well, such as geothermal heat pumps.

“We poured the coals to this,” Ellis said. “The geothermal heat pump industry hasn’t had tax incentives since 1980. Now, for the first time, we’ll have eight years of credits that will allow long-term decisions to be made - eight years of runway for the industry to invest in the equipment and training needed to build the infrastructure required for a high rate of growth.”

Bill Harrison, president of the American Society of Heating, Refrigerating and Air-Conditioning Engineers, commended Congress on including the incentives in the package. “These energy provisions are essential to realizing ASHRAE’s goal of reaching net-zero-energy buildings,” he said in a statement. “While the banking industry may be visibly suffering now due to these economic times, we will all suffer if we don’t find ways to take advantage of alternative energy sources and make our buildings more efficient.”

Several attempts were made during the 110th Congress to extend the credits and provide incentives. However, those attempts failed due to disagreement over funding issues.

“The thing with Congress is that even though the bill had momentum, too often another issue comes along and Congress can get sidetracked,” Ellis said. “We saw the energy tax extenders bill come to a boil, passing in the Senate 93-2 and with similar bills passing in the House, and we knew we had to cook it fast, otherwise the opportunity could be lost.”

Besides the ITC extension through 2016, the signed legislation removes the $2,000 credit cap for homeowners and businesses that install solar electric equipment. It also creates new credits for combined heat and power systems, small wind energy property, and geothermal heat pumps.

“We’re very excited,” saidJeff Mahoney, alternative energy marketing manager for Rheem, whenPMtalked to him from the floor of Solar Show International 2008 in San Diego. “Two to three years wasn’t enough time for a significant investment in solar. The extension was just the impetus we needed.”

Mahoney called the solar water heating industry an “incentive-driven” industry. “The incentives prime the pump, so to speak, until the market can take off.”

The Solar Energy Industries Association says the new credits could unleash $325 billion in private investment by 2016, and create more than 440,000 permanent “green collar” jobs in the United States.

But besides the ability to spark new interest in alternative energies and ramp up sales for their partners’ products and designs, Wisconsin distributor Hot Water Products Inc. is concerned about history repeating itself. The incentives from the late 1970s also brought in “rebate jumpers,” asGregory “Jack” Daniels, co-owner of HWP, calls them.

“In the three days following the bill’s passing, I already had calls; the fly-by-nighters are coming out.” Daniels and HWP hope that the states can maintain their training and certification requirements for these new systems. “You have to make sure the quality is there. Bad-looking installations that don’t work properly could give the industry a black eye.”

Daniels still looks to the positives of the new incentives. “An eight-year extension is great. It brings a lot more contractors to the table to develop business models and get their solar businesses up and running. An eight-year window is a time frame people can bank around.”