Saturday, January 28, 2012

Energy Tax Breaks Proposed, Despite Waning Support for Subsidies

January 26, 2012
Energy Tax Breaks Proposed, Despite Waning Support for Subsidies
By DIANE CARDWELL

Assisted by technological innovation and years of subsidies, the cost of wind and solar power has fallen sharply — so much so that the two industries say that they can sometimes deliver cleaner electricity at prices competitive with power made from fossil fuels.

At the same time, wind and solar companies are telling Congress that they cannot be truly competitive and keep creating jobs without a few more years of government support.

Their efforts received a boost on Thursday from President Obama, who called for a package of tax credits for renewable power as part of a broader energy plan that he outlined while on a campaign swing through Nevada and Colorado.

But the lobbying by the wind and solar industries comes at a time when there is little enthusiasm for alternative-energy subsidies in Washington.

Overall concerns about the deficit are making lawmakers more skeptical about any new tax breaks for business in general. And taxpayer losses of more than half a billion dollars on Solyndra, a bankrupt maker of solar modules that defaulted on a federal loan, has tarnished the image of renewable power in particular.

“Most of the folks I think recognize that this is not a Solyndra effort here,” said Representative David G. Reichert, Republican of Washington, who introduced a bill to extend a renewable tax credit last year. Solyndra was financed under a now-expired program, part of the 2009 stimulus package, that provided government loan guarantees for clean-energy projects, some of which administration officials expected to be risky.

The wind and solar companies argue that the tax breaks they are seeking are different. The tax credits can be taken only by businesses that are already up and running, so taxpayers are less likely to be stuck subsidizing a failing company, proponents say.

“This is a program that doesn’t pick winners or losers,” said Rhone Resch, president and chief executive of the Solar Energy Industries Association. “It’s hard to argue against a program like this that is creating jobs.”

Without the new breaks, industry executives warn, they will be forced to scale back production and eliminate jobs in a still-weak economy.

The American division of Iberdrola, a big Spanish producer of wind turbines, is already feeling the impending loss of one tax break that expires this year. “We’ve seen the prospects for new wind farms really fall off,” said Donald Furman, a senior vice president at Iberdrola Renewables, which announced this week that it was laying off 50 employees. “We’re not getting out of the business and we’re not in any financial trouble, but we are doing the prudent thing so that we don’t have issues.”

The tax break that Iberdrola and other wind companies rely on, called the production tax credit, has been in place since 1992 but after repeated extensions is now scheduled to expire at the end of 2012. It allows for a credit of 2.2 cents per kilowatt-hour of electricity generated for the first 10 years of a project’s operation, which the industry says is sometimes enough to eliminate the price difference between wind power and fossil fuels.

The Congressional Joint Committee on Taxation recently estimated that the production tax credit would cost the government $6.8 billion from 2011 to 2015 for projects in place before the end of this year.

The other tax break, which expired at the end of last year and was especially popular with solar companies, allows renewable energy companies to get 30 percent of the cost of a new project back as a cash grant once construction is complete. Without the cash grant program, a company can still take the 30 percent credit, but must spread the benefit over a period of years. The industry says the grant program is more effective because it encourages a broader range of private investors to help finance its projects.

As of early this year, the cash-grant program, known as the 1603 program, had awarded $1.76 billion for more than 22,000 solar projects, according to the Treasury Department.

Mr. Obama, who has been a steadfast supporter of clean-energy programs, has already begun making a case for new government investment in clean energy projects as a way to foster both energy independence and employment at a time when Capitol Hill evaluates new laws in terms of job creation as well as budget cost or savings.

“Because of federal investments, renewable energy use — sources like wind and solar — has nearly doubled,” Mr. Obama said at a stop at Buckley Air Force Base in Aurora, Colo., where he promoted the increasing use of renewable power by the military and repeated a call for Congress to approve the tax credits. “Thousands of Americans have jobs because of those efforts.”

Mr. Obama used his trip to press for increased use of liquid natural gas in transportation, appearing at a United Parcel Service center in Las Vegas that received a stimulus grant to support natural gas-fueled trucks. He also said that the Interior Department would open up about 38 million acres in the Gulf of Mexico to gas and oil exploration and development, selling leases in June. The Bureau of Ocean Energy Management estimates drilling there could yield one billion barrels of oil and four trillion cubic feet of natural gas.

According to the American Wind Energy Association, wind projects account for more than a third of all the new electric generation installed in recent years, while over the last six years, domestic wind turbine production has grown twelvefold, to more than 400 facilities in 43 states. A recent study by Navigant Consulting found that this year the industry would support 78,000 jobs, but that the number would fall to 41,000 in 2013 without an extension of the production tax credit.

Solar, too, is growing quickly in the United States. According to the Solar Energy Industries Association, more solar was installed in the third quarter of 2011 than in all of 2009 combined. A one-year extension of the 1603 tax-grant program would create an additional 37,000 solar industry jobs in 2012, according to a report by EuPD Research.

Lobbyists for both industries say the new tax breaks need to be passed quickly and are trying to get Congress to include them in a bill to extend the payroll tax cut.

That bill, like all tax cuts these days, has Congress at loggerheads. “But true performance-based incentives, where incentives are only provided when actual production occurs, seem to be maintaining their support,” said Robert Gramlich, senior vice president for public policy for the American Wind Energy Association.

How this will play out in Congress is anybody’s guess, lawmakers say. Mr. Reichert said the credits were not yet part of the negotiations over the payroll tax cut, which is due to expire at the end of February.

Republican leaders may look to revive the Keystone XL oil pipeline — as proposed, the pipeline would run 1,700 miles from oil sands in Canada to refineries on the Gulf Coast — as part of a compromise to approve the renewable energy credits, according to lobbyists and lawmakers involved in the discussions.

But there is a lot of ideological opposition to more tax credits, said Senator Jeff Bingaman, Democrat of New Mexico and the chairman of the Energy and Natural Resources Committee, who supports the extension.

“The rhetoric is that the government should get out of the way,” he said. “That gets translated into opposition to a lot of these things.”

The New York Times reports on renewable energy.


Read more (in new window) at: www.nytimes.com/2012/01/27/business/energy-environment/clean-energy-projects-face-waning-subsidies.html?_r=1

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Friday, January 27, 2012

Navy to purchase gigawatt of renewable energy by 2020

The Navy said Thursday it will ramp up its use of public-private partnerships to purchase one gigawatt of renewable energy by 2020.

Navy Secretary Ray Mabus said in a statement that one gigawatt is enough to power a city the size of Orlando, Fla. — or about 250,000 homes.

The purchase will be one means for the Navy to meet its goal that half of its energy comes from renewable sources by the end of fiscal 2020.

President Obama in his State of the Union address on Tuesday singled out the Navy for "one of the largest commitments to clean energy in history."

The Navy will reach its goal by using a variety of alternative financing techniques, including:

• Energy savings performance contracts, where a company pays the upfront investment for energy-efficiency renovations and retrofits in exchange for payments from energy savings over time.

• Enhanced-use leases, where a company gets to develop government land with renewable energy or other projects in exchange for payment or in-kind services such as reduced-rate energy.

• Power purchase agreements, in which a power company constructs an energy system in exchange for fixed payments over a certain number of years.

Mabus will establish a task force that will select appropriate renewable energy projects, the Navy said.

Tom Hicks, deputy assistant Navy secretary, said at a panel discussion in July that the service expects to have 100 megawatts of solar power, six megawatts of wind power and 270 megawatts of geothermal power by the end of 2012.

By ANDY MEDICI | Last Updated:January 26, 2012
Federal Times


Read more (in new window) at: www.federaltimes.com/article/20120126/FACILITIES04/201260302/

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Friday, January 6, 2012

Buffett’s MidAmerican Utility Buys Three Iowa Wind Farm Projects

Buffett’s MidAmerican Utility Buys Three Iowa Wind Farm Projects

Bloomberg reports By Andrew Herndon - Jan 6, 2012 1:50 PM ET

A unit of Warren Buffett’s MidAmerican Energy Holdings Co. (329802Q) acquired three wind-energy projects in Iowa that will have a combined generating capacity of 404.8 megawatts at completion.

MidAmerican Energy Co., Iowa’s largest utility, bought from RPM Access LLC the 103.5-megawatt Vienna wind project that will be built in Marshall and Tama counties, it said today in a statement. The Des Moines, Iowa-based company also purchased two projects from Clipper Windpower Development Co., including the 200.1-megawatt Eclipse project in Guthrie and Audubon counties and the 101.2-megawatt Morning Light project in Adair County.

The projects are expected to be completed by year-end, increasing MidAmerican’s wind generation to 2,284.8 megawatts, according to the statement. The company will have invested $4 billion in Iowa wind farms once the three plants enter service, it said.

MidAmerican Energy Holdings Co. is a subsidiary of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A)

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


Read more (in new window) at: www.bloomberg.com/news/2012-01-06/buffett-s-midamerican-utility-buys-three-iowa-wind-farm-projects.html/


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Thursday, January 5, 2012

Solar Panels Compete With Cheap Natural Gas

Renewable energy is growing rapidly in the U.S., with wind and solar industries enjoying double-digit growth each year. Part of that growth comes from more homeowners choosing to install solar panels.

With government subsidies, some people can even make a financial argument for installing the panels. But in recent years, the price of one fossil fuel — natural gas — has declined so much that solar panels are having difficulty competing.

The reason natural gas prices have fallen is because production is way up, thanks to hydraulic fracturing. Fracking, as it's called, is a controversial drilling technology that some say harms the environment. But the process has also made it possible to extract oil and gas once thought to be trapped in rock too deep underground for drillers to reach.

Due in large part to a combination of fracking and horizontal drilling, there's been a nearly 30 percent increase in the amount of natural gas produced in the U.S. since 2005.

"We've got a classic situation of supply and demand," says Kathryn Klaber, president of the Marcellus Shale Coalition, an industry group based outside Pittsburgh.

Natural gas demand has not gone up as quickly as supply, and Klaber says the price has dropped.

"A handful of years ago, natural gas could have been in the order of 12, 13, 14 dollars per million BTU," she says. "We're now down to three to four [dollars]."

This has allowed utilities that burn natural gas to produce electricity to hold the line on rates. For most of us, that's a good thing, but for those who've installed solar panels, it makes that investment less of a bargain.

Barbara Scott had 21 solar panels installed last March on her house in Media, Pa. Scott's family was the first in the community, and she was prepared to evangelize, "We can have open houses and write newsletter articles and promote the idea of solar," she said. But that was before the economics changed.

With government rebates and tax incentives, Scott says, her family spent $21,000 to install the system. She figured it would take eight years to recoup that investment.
........


http://www.npr.org/2012/01/05/144526652/solar-panels-compete-with-cheap-natural-gas
Read more (in new window) at: www.npr.org/2012/01/05/144526652/solar-panels-compete-with-cheap-natural-gas


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Surge in hybrid owners on horizon

Published on Thursday 5 January 2012 12:42

Eco-warriors will be delighted with the news that hybrid cars are soon to undergo a surge in popularity, according to a new study from oil company Exxon Mobil.

The company released its annual energy report recently, which revealed that by 2040, low emission cars will make up half of all vehicles on the roads.

The news is likely to be particularly welcomed by environmental groups, many of whom have repeatedly expressed worries over the impact of the environment our over reliance on oil and petrol has. The idea that many car owners will switch to a hybrid, coupled with the increasingly advanced science behind fuel alternatives, means that it is expected that developed countries will be able to stabilise their energy demand over the coming 30 years, with countries such as the US expected to undergo no significant rises in oil consumption.

Aside from the impact on the environment, this news will also be received well by economists and financial experts the world over. Increased energy efficiency and lower fuel consumption is thought to be linked to financial growth and the economy. The report suggested that while worldwide-GDP would grow by a rate of 2.9 per cent a year until 2040, energy demand would only grow by a comparatively smaller 0.9 per cent.

However, there is some bad news. Exxon Mobil predicts that developing countries will not be able to stabilise their energy demand in the same way as more developed ones, due to the expense of funding research into fuel efficiency and in switching to a more sustainable method. Indeed, developing countries are expected to increase energy demand by 60 per cent between now and 2040, unless switches to a more sustainable method can be made quickly, easily and inexpensively.


Read more (in new window) at: www.northumberlandgazette.co.uk/community/surge_in_hybrid_owners_on_horizon_1_4115514/

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