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Solar industry steams as tax credits dry up

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The solar investment tax credit was't included in the list of 52 provisions announced late last, largely because it expires at the end of 2016. (AP Photo) 

When the Senate Finance Committee begins consideration of a massive package of tax extenders on Tuesday, one major incentive won't be in the mix — a subsidy for solar energy.

The solar investment tax credit was't included in the list of 52 provisions announced late last week by the panel's top Republican and Democrat, largely because it expires at the end of 2016. The other items included in the two-year extension package already lapsed or will expire at the end of this year.

Still, senators filed a clutch of amendments relating to the solar credit ahead of the Tuesday mark-up. One from Sen. Rob Portman, R-Ohio, would "responsibly phase out" the incentive. Another bipartisan amendment would allow solar power producers to collect the credit if construction begins before Dec. 31, 2016, rather than begin producing power by that date.

But such amendments must gain approval from the broader committee, which is uncertain.

Committee Chairman Orrin Hatch, R-Utah, and ranking member Sen. Ron Wyden, D-Ore., are seeking only to re-up and revive credits through the end of 2016 in the underlying bill. In that scenario, the solar provision already is covered. The real prize for Hatch and Wyden is broad tax reform, and they view long-term extension of the piecemeal subsidies as antithetical to achieving that result.

"[A]s we look beyond [Tuesday], it's critical we all recognize and take action to end this stop-and-go approach to tax policy through extenders," Wyden said last week.

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The solar industry, however, is pushing for certainty beyond 2016, when the 30 percent credit for solar installations would fall to 10 percent.

"Since the solar [investment tax credit] is not an expiring tax credit until the end of 2016, concerns have been raised that we are not germane to the debate. We respectfully disagree," Ken Johnson, spokesman with the Solar Energy Industries Association, told the Washington Examiner.

The incentive, which was last extended in 2008, has become the lifeblood of third-party installers that have propelled a massive spike in new residential solar systems, though solar still provides less than 1 percent of the power consumed in the United States. The cost of solar panels plunged 76 percent between 2009-13, as Energy Secretary Ernest Moniz noted at a conference last month, which has aided the boom.

Johnson's group has waged an aggressive lobbying push to ensure the solar credit is renewed, as it has been blitzing Capitol Hill offices and earlier this month issued a call to supporters to write lawmakers to back an extension.

The credit has support from Democrats and a clutch of Republicans, such as Sen. Dean Heller, R-Nev., whose sun-drenched state has witnessed an uptick in solar power. But solar incentives face opposition from traditional electric utilities, led by industry group Edison Electric Institute, who see solar as a threat to their business models. Conservatives also dislike the subsidy, saying it distorts the power market, though it's not as big a concern as the 2.3-cent per kilowatt-hour incentive for wind energy, which was included in the extenders package.

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"I would put that in the same category as what those of us on the Right would call the 'green extenders,'" Ryan Ellis, tax policy adviser with the conservative Americans for Tax Reform, told the Examiner recently.

Supporters contend solar technology is about five years from reaching grid parity — costing an equal amount as other forms of power from the electric grid, once accounting for the cost of owning and operating a power plant — when it would no longer need subsidies. Subjecting solar to the boom-and-bust cycle of short-term extensions, however, could dampen enthusiasm and new projects, delaying much-needed cost reductions, proponents say.

"With that frame we're certainly hoping Congress will advance the [investment tax credit] this year in advance of a drop-off," Evan Dube, spokesman for the Alliance for Solar Choice, said in a recent interview.