Tax laws are causing a solar installation frenzy, trying to beat end of 2008 tax credit expiration


Photo courtesy of
M.Barkley at Flickr.com.

At the end of this year, an elevated tax credit for for alternative energy projects is set to expire. These federal tax credits will decline from 30% of the total construction cost to just 10%, and several alternative energy groups have been lobbying Congress to extend the benefit. Even though some states and local power companies offer additional incentives to invest in alternative energy, the reduced Federal tax credits will have wide ranging effects. Industry experts and analysts expect companies who sell solar, wind, biogas, microturbine, and fuel cell technologies could be wiped out by reduced tax credits:

Without the credits, “I’ll essentially be out of business,” Tamas said. “Solar will be dead, other than for a little bit of residential.”

Congress was expected to renew these popular tax credits, but the Senate and House have gone into recess without doing so. Since many of these projects require months and months of construction time, there could be a lag in construction even if the credits are renewed in September. In the near term, the uncertainty is creating a solar building boom.

Many big retailers are attempting to complete green energy projects before the tax credits expire on December 31st. Wal-Mart, Kohl’s, Whole Foods, Safeway, REI, and BJ’s Wholesale club are just a few major companies that are accelerating their solar installation plans to beat the deadline. This means that solar workers are pulling overtime and likely to see big bonuses this year, but they may be getting pink slips in the spring.


Photo courtesy of
EGL Energy at Flickr.com.

Will Congress act to save Greentech jobs?


Photo courtesy of taryn_* at Flickr.com.

At the end of 2008, the cost of installing and operating alternative power generators is set to rise. There are currently federal tax credits that offer a 30% rebate on solar improvements (up to $2,000), but a sunset clause will reduce the rebate from 30% to 10% after January 1st, 2009.

Also, there’s a production tax credit that offers incentives for utilities to use wind, solar, geothermal, biomass, and other alternative power sources. It’s also set to expire at the end of 2008. Unless these two tax credits are extended, industry studies warn that the US could lose more than 100,000 green collar jobs.

The open question is – how much truth lies behind these numbers? Even if the solar tax credit is allowed to lapse, there will be no effect on projects that cost more than $20,000. Is it possible that self interested alternative energy companies are trying to get legislators attention through fear? Since when did green power companies start behaving like coal lobbyists?