Extension of U.S. Treasury’s cash grant program bodes well for solar industry at close of 2010

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How will we remember 2010? Several things come to mind: a slowly recovering economy; Republicans winning control of the House and narrowing the Democratic advantage in the Senate; and virtually zero growth in every industry in the U.S.–with the exception of the solar industry.

Just in time for Christmas, the House and Senate passed a two-year extension of the Bush-era tax reductions and tied to it a one-year extension of the U.S. Department of the Treasury's 1603 cash grant program for the solar and wind industries. This “grant in lieu” program will allow companies to receive cash instead of the tax credit originally envisioned in 2009 when a 30% tax credit was created for solar installations. Since many of the companies that would have otherwise participated in financing and owning solar projects did not have the ability to take advantage of a tax credit, the decision was to offer a cash grant in lieu of the credit. 

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No matter how unintentional the “grant in lieu” was (since its extension was an afterthought tacked on to the Tax Relief, Unemployment Authorization and Jobs Creation Act of 2010), it has huge implications for solar and green jobs in 2011.

Perhaps this year the U.S. will be part of a “perfect storm” that significantly benefits and expands the solar industry: module supply is expected to be less constrained in 2011; prices are expected to moderate slightly; and there is significant demand in the U.S. for solar installations of all kinds. Tie this into the development of more state-level solar programs, and we will see an increase in demand leading to the development and growth of small and large solar companies across the country. This means badly needed job creation–real, skilled, long-term jobs in engineering, construction, finance, sales and logistics.

Before we celebrate too heartily, we should remember that there is still a great deal to do. Renewable energy of all kinds accounts for a small percentage of our overall energy portfolio and, in the near term, the U.S. needs oil, coal and nuclear power to provide for its citizens. The work we start today will not be finished for many years to come. What is important is that we start now.

The experts suggest that the U.S. solar industry will grow to the number-two position behind only Germany in 2011. After many years of false starts, political uncertainty, and resistance from other better-financed energy groups, it appears that the inevitable is happening, and that our government of the people, by the people, and for the people is actually prepared to deliver what Americans have supported for the last 10 years–clean energy.

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