Tax breaks for solar firms could create 200,000 US jobs

The solar industry has this week stepped up its lobbying for the extension of a cash grant for solar projects and new tax breaks for equipment manufacturers, claiming that over 200,000 green jobs could be created.

Launched as part of the US stimulus package in early 2009, the Treasury Grant Program (TGP), gave a cash grant in lieu of a tax credit to solar project owners.

However, the grant is due to expire this December, raising fears that the recent boom in solar energy projects in the US could be derailed.

The Solar Energy Industry Association (SEIA) this week published a report suggesting that extending the scheme by two years to include projects with a construction commencement date before the end of 2012 would boost investment in solar projects by $21bn between 2010 and 2016, creating another 67,000 jobs by 2015.

The Association is also recommending that solar equipment producers be made eligible for a new manufacturing investment tax credit (MITC). The tax credits for renewable equipment manufacturers were originally launched alongside the TGP scheme, but, to date, solar equipment firms have not been covered by the credits. Including solar manufacturers would bring in another $22bn investment for the solar sector, according to the SEIA, creating 158,000 jobs by 2016.

Combining the two measures to create a third scenario would create $48bn in extra investment for the solar industry, and create 207,000 jobs in 2016, the SEIA predicted in its report.

The US government is currently looking at ways to address its looming budget deficit, but the SEIA argued that its proposed incentives would actually deliver a net boost to tax revenues over the next five years.

"When comparing 2010 and 2016 in terms of government stimulus, increased employment and the unemployment alternative, we find that in five years the saved unemployment benefits and additional tax revenue are higher than the government stimulus for all three scenarios," the report concluded.

Solar manufacturers might need all the help they can get in the short term, according to a new report from renewable energy research group Pike Research, which this week warned that the global market for solar modules faced considerable oversupply this year.

The market for solar modules shifted from a supply constrained state to a demand-driven environment in 2008, the company said in its report, entitled The New Solar Market. Falling crystalline silicon cell prices, frozen credit markets and regulatory changes in Spain have forced down prices, it warned, adding that the growth of thin film supply and market share has done little to help.

However, while the oversupply of panels may lead to some short-term pain for solar manufacturers and will likely spark consolidation across the sector, the report argued that it will also significantly boost solar power's competitiveness, allowing it attain parity with fossil fuel prices within just three years.