Wind and Solar power incentives face cutbacks

PHOTO: 917press / via Flickr.com

The federal government has supported every type of power that would eventually dominate the energy market in the US since the 19th century.

That's according to a 2011 report by the venture capital company DBL Investors. They looked at the federal subsidies injected into new industries like land grants to timber companies and laying railroad lines to transport coal.

It all adds up to a considerable amount of subsidies in the early days of each carbon-based energy source.

The availability of those subsidies is enviable to Joe Sliker, who runs a solar installation company called Renovus.

He says a residential installation will take about four months. But only one week is spent on the physical installation, the rest is lining up the incentives and working out the grid connection.

"I would love to be able to just sell systems, design them and install them," says Sliker, "the same way that a contractor would install a deck or an addition or anything else."

The reality is Sliker and others like him rely on subsidies to give them a competitive edge against industries that have been around for a long time.

"It's been 30 years that this has been really needing to happen and if you take away the federal support it's going to be bad for the industry," said Sliker.

But the transition to renewables is under fire. The high-profile failure of the solar power startup Solyndra has fueled a pushback against continued support.

In a September hearing of the House Oversight Committee, California Republican Darrell Issa portrayed federal support for renewable power as a waste of money.

"Looking back on the Obama green energy record three years and billions of taxpayer dollars later, the American taxpayers have received very little return on the president's signature investment," Issa said.

According to the Congressional Research Service, in 2009 for every $1 in tax breaks for fossil fuels, $7 went to renewables.

So the government has already taken a risk on renewable energy and now has to decide whether it wants to continue.

Two major incentives may be the first to go.

A 30% upfront tax reduction that was included in the stimulus act for commercial solar projects ended last year. Another 30% break for new wind projects will expire at the end of the year unless renewed by Congress.

That fosters uncertainty in the marketplace, according to Carol Murphy of the Alliance for Clean Energy New York.

"We've seen projects put on hold, we¿ve also seen a number of companies that are member companies of ours laying a large number of people off," said Murphy.

The renewable power company Iberdrola announced 50 layoffs this month. New York City-based Everpower is also putting on hold a new windfarm in Allegany.

That windfarm is facing a lawsuit but what's really stymied the project, says company's CEO, Jim Spencer, is the uncertain future of federal tax breaks.

"These are multi-million dollar projects, you need to know that that tax credit is going to be available well into the future," said Spencer.

Despite those obstacles Spencer is optimistic that the wind power industry will be competitive with traditional fuels by 2020.

But Maureen Reno, of the Union of Concerned Scientists, says that it is still far too early to expect parity between fossil fuels and renewables.

"Ideally, if you want to say place a limit on how long you want to subsidize renewable energy, you'd want to subsidize it until what's called market transformation is complete," said Reno.

She says that kind of transformation supported coal through the 19th century and oil through the 20th century. But the federal government has to decide if now is the time to push for renewables and if so how exactly that should be done.

Read more at InnovationTrail.org.