Image via WikipediaLate Tuesday afternoon the Senate voted to extend renewable energy tax credits for the wind and solar industries. The final tally: 92-3; a surprising slam dunk.
Surprising because the tax credits had been held hostage by partisan politics for much of this year and, as deadlines loomed, it didn't look good for getting it passed.
But concern on both sides of the aisle about the economy and energy forced the hand of compromise. Extending the credits now also happens to secure something on the order of 115,000 jobs and at least $19 billion in renewable energy investments.
This is a good thing and has largely gone unnoticed in all the hullabaloo around the $700B Bailout plan. And, I believe, this has the potential to have more and longer impact on the economy than Paulson's Power Play.
Why? Because this investment in the new green economy can unleash opportunities for alternative energy investors and companies, opportunities that have been waiting in the wings for too long.
The Bill, known as the Energy Improvement and Extension Act of 2008, stipulates
* $18 billion in tax credits for using wind, solar, and geothermal
* 30 percent tax credit for the purchase of residential, commercial, and
utility-scale solar PV systems with no cap for eight years.
* Extension of the production tax credit for wind for one year.
* Extension of tax credits for wave and ocean tidal energy.
* Qualification for residential and commercial small-scale wind and geothermal heat pumps.
* Taxpayers subject to the Alternative Minimum Tax are now eligible for the tax credit.
Removing the cap for the maximum available 30 percent tax credit is a big deal for for both residential and commercial solar project developers. The previous cap was a paltry $2,000, which doesn't go far with most solar projects.
Now financiers of larger projects are eligible to get back at least 30 percent of their investment with no cap. And those who were on hold waiting for tax credits to pass, may now be gearing up.
In addition, utilities, which heretofore were not allowed to receive solar tax credits, are now able to realize the benefits. This could increase solar spending among utilities in states requiring minimum percentages of electricity from renewable resources.
Effects of the passing of this legislation were already having an impact on solar stocks yesterday.
Now it's up to the House to polish it up and for President Bush to put his veto stamp away. He has, according to sources familiar with the situation, expressed his support for renewable energy tax credits and even the ATM provisions.