Section 1603 extension – a one year holiday gift?

Posted by Dalkia Solutions on Dec 17, 2010 5:00:08 AM

With last night’s tax bill passage by the House, the renewable energy industry has been given a wonderful holiday gift.   But this toy’s battery only lasts one year and you might not be able to replace it.

By extending the Section 1603 provision for just another 12 months Congress has extended life for renewable grants, but kicked off another year of scrambling by project developers and customers.  During 2011 activity will be harried as everyone wonders if this extension will disappear in 2012, be extended yet again for another year, or be part of a broader cleantech/energy package with different economics, better or worse, starting January 1st 2012.

As we outlined a year ago the key for any energy related incentive, (Federal, State grant or utility rebate) is to have consistency and visibility.  Customers, developers and investors need this in order to make long term decisions and not be encouraged to try to game the system – or worse be gamed by missing a holiday special.

While this 1603 extension was bundled into Washington’s more politically important consumer tax cut deal, we have to hope that in early 2011 our legislators can figure out how to give the cleantech market these more permanent signals about economic support, regardless of whether they’re higher or lower.  Only then can they catalyze more rational, long term cleantech investment decisions.

Topics: Solar PV, Federal Grants, renewable grants, Section 1603, Renewable Energy