Solar Tax Credit Loses Energy

Article excerpt

The Solar investment tax credit (ITC), created by the Energy Poliy Act of 2005, allows those who invest in solar technology to deduct 30% of the purchase and installation costs incurred during the year from their taxable income. Although it's been a boon for home and small business owners who can quickly install photovoltaic (PV) solar panels, water heaters, and other technologies, the ITC hasn't provided comparable benefits to much larger solar power plants that could supply grid electricity to homes and businesses throughout the United States--a state of affairs that may be prolonged by political bickering.

In a technology known as concentrating solar power (CSP), arrays of reflective mirrors spread over hundreds of acres collect and focus the sun's heat to make steam that, in turn, creates electricity by running a turbine engine. A total of 10 CSP plants built in sundrenched regions of California and Nevada during the 1980s--plus a 1-MW demonstration plant in Arizona--already power more than 300,000 homes at a cost of roughly 15[PHI] per kWh, comparable to standard rates in many U.S. locations. Electric utilities in those states, and also in Florida and Hawaii, have agreed to purchase 4,500 MW of additional solar-generated electricity from a total of 16 planned CSP facilities, which could power up to 3.5 million American homes.

But before investors will fund those projects, they want to be sure ITC tax breaks will be available throughout plant construction. A typical CSP plant takes 4-6 years to build, explains Nate Blair, a senior energy analyst with the Department of Energy National Renewable Energy Laboratory. Congressional officials have proposed eight-year extensions to the ITC that would boost the entire solar industry while also making CSP costs more predictable in the long term. …