Thoughts on Solar by Run on Sun's Founder & CEO, Jim Jenal

Hard on the heels of our posting about the importance of proper solar policies, the Solar Energy Industry Association (SEIA) today released a report showing the potential for additional job growth in the solar industry simply by extending the section 1603 Treasury Grant program.  This is an important policy development and Congress should extend the program through 2016.

The Section 1603 Treasury Grant Program

First some background - the section 1603 Treasury Grant Program (TGP) is an alternative to the 30% investment tax credit for solar.  The tax credit allows a commercial client to receive a credit on their income taxes for 30% of the cost of installing a solar power system.  However, not all potential clients can use a tax credit of that size (or at all) since their taxable income may not be that great.  Moreover, in many commercial transactions, financial partners are often brought in to support the project through a power purchase agreement and again, the revenue may not be sufficient to make the tax credit attractive.

The TGP simplifies that process by allowing commercial clients to apply directly to the treasury for a grant of 30% of the system cost, regardless of their tax appetite.  Moreover, the grant can be applied for upon project commissioning, meaning the payment is received possibly well in advance of receiving the corresponding tax benefit.

Advantages of Extending the TGP

The SEIA report - prepared for them by EuPD Research - outlines several significant advantages from extending the TGP.  In particular:

One-Year Extension

A one-year extension of the 1603 Treasury Program through 2012 would have the greatest impact on economic activity in 2012 and 2013, as well as enable growth through 2016 as projects complete construction and come online.

• An additional 37,000 jobs would be supported by the solar energy industry in 2012, a 12% increase over baseline.
• The additional cumulative capacity installed (2012-2016) would be about 2,000 megawatts over baseline, enough to power 400,000 homes.

Two-Year Extension

A two-year extension of the TGP commence construction deadline through 2013, would yield 1,000 additional jobs in the solar energy industry in 2013, a 16% increase over baseline, and would result in 3,600 megawatts of cumulative additional capacity installed from 2012 through 2016.

Five-Year Extension

A five-year extension of the TGP to coincide with the term of the investment tax credit would support an additional 114,000 jobs in the solar energy industry in 2015, a 32% increase over baseline, and would result in 7,300 megawatts of cumulative additional capacity installed from 2012-2016. A predictable five year policy framework will generate an environment that fosters industry growth larger than the potential year-to-year extensions and would create sustained momentum for the industry.

Here is what that would mean graphically:

Sadly, what should be a straight-forward policy decision that produces good, American jobs, reduces pollution and increases domestic energy production will no doubt face a stiff fight in Congress this Fall.

Still, as the industry prepares to meet at the annual Solar Power International Conference in Dallas next week, it is time for solar advocates to lace up their work boots and push back against those who would gut our industry just as we are starting to make a real difference - and isn’t making a difference why we got into this business in the first place?