US solar lobby hopes for tax break decision this week

Just as the Senate moves to vote on legislation extending federal support for tax incentives, an academic has released a report questioning the technology's short-term commercial viability.

Rhone Resch, the President of the Solar Energy Industries Association, has been rallying a consortium of renewable energy organisations to lobby the US Congress to extend a tax first credit first awarded to the solar industry in 2005.

The credit, due to expire this year, provides investment incentives to the owners of solar projects, allowing businesses and residences to access tax credits equal to 30 per cent of their expenditure on solar equipment.

The Association has previously supported bills from the House of Representatives and the Senate that haven't progressed since their introduction early last year. It also failed to see the extension passed as outlined in the bill H.R 3221 last December after it got held up in the Senate. But following a cloture vote by Senator Harry Reid (D-NV) the Senate is likely to vote on the legislation as early as this week.

SEIA spokesperson Monique Hanis is also hoping that the House will vote on bill H.R 5351, which provides an alternative route for getting the tax credit extension passed. The Association is still hoping for a eight-year extension to the business credit, and a six-year extension to the residential version.

Alternatively, a last-ditch extender's bill at the end of this year could also save the tax incentive, but this would create a "confidence gap" this year among the owners of around 80 utility-scale solar projects that Hanis says are currently in planning or development.

However, while many in the solar industry push for an extension of the tax credits, Severin Borenstein, director of the University of California Energy Institute, is arguing that tax subsidies are not the answer.

His recent report, The Market Value and Cost of Solar Photovoltaic Energy Production, suggests that photovoltaic solar technology remains commercially unviable in the context of wholesale energy prices.

"The current flat tariff really reduces the value of solar," Borenstein said, arguing that the value of solar cells - which tend to produce energy at peak usage periods - would be improved by dynamic metering. "The politics is trumping good policy," he added.

Borenstein, who right now favours wind power as a more commercially viable renewable energy technology, hopes that forthcoming improvements in solar technologies may change the value proposition. "Nationwide, we think that [solar technology] will cross grid parity in 2015-2016," he said. "And that doesn't take account of what could happen in terms of climate change legislation."