US to boost solar manufacturing with tax credits

www.environmental-finance.com
13 November 2009

US Senators have introduced a bill that would extend the 30% solar investment tax credit (ITC) to equipment and facilities used to manufacture solar technology. Currently, the solar ITC can be drawn on for investment in or installation of solar energy technology in operation in the US before 1 January 2017. Under the Solar Manufacturing Jobs Creation Act, equipment and facilities used to manufacture solar energy technology would become eligible for the solar ITC. These technologies include solar cells, silicon, evacuated tubes and flat-plate solar collectors.

Senators Debbie Stabenow, Robert Menendez and Michael Bennet introduced the bill in the Senate this week. Congressman Dave Camp plans to introduce a version of the bill in the House of Representatives later this month. "This bill will provide additional tax credits for solar equipment manufacturers that will help us win the global race against China and other countries to produce solar technology in the clean energy economy," Stabenow said.

The bill would also make manufacturing equipment eligible for the grant programme created in the economic stimulus package, which allows renewable energy project developers to receive cash payments in lieu of tax credits, according to a summary of the bill by the Solar Energy Industry Association (SEIA). The proposal would extend this provision to manufacturing equipment for property in operation before 1 January 2011 or after that date if a written binding contract was entered into before then.

The US produced more than 40% of the word's solar photovoltaic (PV) cells a decade ago, but only 5% in 2008, SEIA said. "Not long ago, the US was the leading global manufacturer of photovoltaic solar cells, but we've fallen behind Europe and Asia because we didn't have the right policies in place," said SEIA president and CEO Rhone Resch. "By extending and expanding the solar manufacturing tax credit, we'll have the support necessary to compete with other countries and continue creating jobs in the solar industry."

The tax credits in this legislation will create 315,000 domestic jobs, SEIA estimated. With the eight-year extension of the solar ITC last autumn, the solar industry is projected to gain $325 billion in investment by 2016, according to a study by Navigant Consulting.