A local company has lost out on part of a $45 million project in the Midwest because federal tax incentives for renewable energy sources – an integral part of the economics of all renewable energy projects – are set to expire on Dec. 31.
Roughly $200 million invested in two Pittsfield projects that would produce up to 50 megawatts of energy and 50 million gallons of biodiesel is also likely to be affected. Two wind turbine projects in North County that would collectively produce nearly 38 megawatts of energy could also face significant funding obstacles.
According to sources in the offices of Sen. John F. Kerry and U.S. Rep. John W. Olver, D-Amherst, several attempts to extend the expiration of the Investment Tax Credit and the Production Tax Credit have passed the House of Representatives, but were defeated in the Senate, where Democrats have a smaller voting edge. Republicans were reluctant to pass the last attempt because it proposed paying for the tax credits by reducing subsidies to the oil industry, sources said.
The latest proposal recently passed the House and is awaiting action in the Senate. It would extend the tax credits for solar projects for six years and wind projects for one year on land and three years at sea.
The unreliability of the tax credits as investment incentives has resulted in the loss of at least one project so far for a local company, EOS Ventures.
“If I can’t get a project in the ground by the end of 2008, there’s a chance that in 2009 that credit is not going to be there and that economic model falls apart,” said Tyler Fairbank, EOS president and CEO. “Every renewable project right now is on the brink.”
He said that other developed nations have taken the lead in renewable energy incentives, such as Japan’s plan for 12 years of incentives and Germany’s for 20 years.
“In this country, which is in economic peril right now because of the huge cost of energy, renewables are the right direction to be going,” Fairbank said. “But we are literally about to take a giant step in the opposite direction if we don’t get this thing nailed. We should be outraged.”
He said that EOS was part of a $45 million, 18-megawatt wind farm project in the Midwest, which had all of its permits and was ready to begin work. But a utility company that was part owner of the project pulled the plug “because they were uncertain about the production tax credit being extended and opted not to move forward.”
During the field hearing of the Senate Committee on Small Business and Entrepreneurship yesterday at Berkshire Community College, Kerry said the Senate failed three times to pass renewable energy legislation because the Republicans lined up against it.
“If we’re going to get these clean energy businesses up and running, we need to extend the energy tax credits right away so investors have the confidence to invest and innovators have the resources to move forward,” Kerry said yesterday in e-mailed comments.
Olver, responding to questions via e-mail yesterday, said “incentives keep the focus on the right places, developing clean energy technologies, creating high-wage jobs, and saving consumers and businesses money on their energy bills.”
Failing to extend these incentives, Olver said, could risk 116,000 jobs in the wind and solar industries and more than $19 billion in clean energy investment.
The incentives are also an important part of Gov. Deval L. Patrick’s economic plan for the commonwealth, said Robert Keough, spokesman for the Massachusetts Executive Office of Energy and Environmental Affairs.
If the extension fails, Fairbank, of EOS, said, on Jan. 1, “the industry just takes a massive blow because you just can’t make the economics of these projects work without incentives.”
By Scott Stafford, Berkshire Eagle Staff
29 May 2008
URL to article: https://www.wind-watch.org/news/2008/05/29/tax-credits-near-expiration-jeopardizing-green-projects/