Apologies from the offices of Mining and Money: We’re late in raising a glass of bubbly to celebrate the Great Renewable Energy Production Tax Credit Extension. Sorry. We’ve been caught up in preparing the Community (aka forum) entity of this site, due out next week!
Nevertheless, renewable energy companies operating in the US have much cause for celebration as the US Senate voted last Thursday to renew an extension of tax incentives that encourage renewable energy production and investments to reduce energy use. As reported by Grist.com:
“The U.S. Senate passed an extension of the renewable-energy production tax credit Thursday as part of a bill intended to address the ailing U.S. housing market. The renewable-energy credit provides a per-kilowatt-hour incentive for the first 10 years a renewable-energy project is in operation — a credit considered to be a vital driver of clean-energy expansion. The credit is worth an estimated $6 billion and will be extended for another year, through 2009, if the legislation makes it past the House of Representatives and President Bush. Homeowners and businesses will also be able to offset up to 30 percent of the cost of solar and fuel-cell equipment under the bill, and homeowners who install efficient insulation, furnaces, and windows will get additional credits.”
An excellent investment, to be sure. But the Renewable Energy tax credit has come and gone several times in the past, each time sending the industry into spasmodic tail spin.
In fact, since 1999, the renewable production tax credit has come and gone three times, with clear consequences. This graph from UCSUSA.org says it all (click to enlarge):
The correlation is clear to see: No tax credit extension, no growth.
You may notice that the stats on the chart end at 2006, just as the renewable energy production tax credit (PTC) was extended for another year. So what happened in 2007? 45% growth, or the addition of 5,244 MW. That’s more than double the 2006 figure.
The total installed capacity in the US now stands at 16.8 GW.
With the PTC extended for at least another year, it’s reasonable to predict that the US will overtake Germany as the top producer of wind (22.3 GW) by 2009. Surely the Senate won’t let the PTC lapse next year, not once it has clinched the top spot for global wind production?
