American Council On Renewable Energy (ACORE)
Partnership for Renewable Energy Finance (PREF)
US Renewable Energy Market Momentum Threatened; Federal Treasury Grant in Lieu of Tax Credits Due to Expire 12-31-10
At a press conference in Washington, top renewable energy finance experts warned of a potential market cliff at end of 2010 if the Treasury Grant program is not extended, threatening US renewable energy scale-up and jobs
Washington, DC âEUR" July 21, 2010 âEUR" The United States Partnership for Renewable Energy Finance (US PREF) has identified an impending gap in federal support for renewable energy projects at the close of 2010. At a press conference today, top leaders from the financial industry warned that without extension of the 1603 Renewable Energy Treasury Grants, also known as the Grant in Lieu of Investment Tax Credit, the US renewable energy market will contract with associated loss of jobs following years of impressive market growth.
âEURoeThe renewable energy industry is facing a crisis, a market cliff at the end of the year, requiring urgent action,âEUR said Michael Eckhart, President, American Council On Renewable Energy. âEURoeThe impact of the financial crisis goes on, and if not addressed, the situation risks losing thousands of jobs that were just created.âEUR
The Section 1603 Treasury Grant program was enacted by Congress in 2009 as part of the American Recovery and Reinvestment Act to help address the impact of the financial crisis on the emerging U.S. renewable energy sector. Specifically, by providing tax grants in lieu of credits for qualifying renewable energy investments, the Treasury Grant Program has addressed a critical barrier to the continued flow of capital to renewable energy projects throughout the U.S. at a time when the economic downturn had begun to severely limit the use by investors of the tax credits that have traditionally played a central role in U.S. renewable energy policy incentives.
âEURoeThe Treasury Grant program has been a success story in supporting the growth of the U.S. renewable energy sector and generating badly needed jobs for the U.S. economy,âEUR noted Pat Eilers, Managing Director of Madison Dearborn Partners. He added, âEURoeNearly $2 billion of 1603 grants were disbursed in 2009 which helped stimulate nearly $9 billion of new investments by the private sector in renewable energy projects and created an estimated 72,000 jobs in the wind and solar industries.âEUR
âEURoeIf the Treasury Grant Program is allowed to expire in 2010, the level of capital that is available to finance renewable energy is anticipated to decline by more than 50%, jeopardizing the installation of clean renewable power projects throughout the US and our international competitiveness,âEUR said Neil Auerbach, Co-Managing Partner of Hudson Clean Energy Partners. He added, âEURoeThe Treasury Grant program is one of our nationâEUR(TM)s most successful renewable energy policy initiatives, creating new jobs and ensuring the US is competitive in the emerging clean tech sector.âEUR
Marshal Salant, Managing Director at Citi, added, "With the financial crisis and associated economic downturn having greatly diminished the pool of investors able or willing to invest on the basis of tax benefits, the availability of tax equity capital is expected to remain at depressed levels that would be insufficient to meet U.S. renewable energy project financing requirements. Continued access to the Treasury Grant program is urgent to maintain investment in environmentally friendly renewable energy projects, to promote U.S energy independence, and to create US jobs."
The Section 1603 Treasury Grant Program has played a crucial role in supporting the U.S. renewable energy market. The expiration of the Treasury Grant Program will significantly impact the renewable energy market, particularly because financial market constraints severely limiting use of the tax credits are expected to last for a few more years.