Renewable energy requirements sliced from bill

WASHINGTON -- Compromises that won passage for a major energy bill in the Senate this week left investors for geothermal, wind and solar resources out in the cold.

After a long struggle, the Senate passed the bill late Thursday. It increases vehicle fuel mileage standards and encourages energy efficiency in federal buildings and in electricity-guzzling appliances. The House is expected to take a final vote next week.

But passage was assured only after negotiators removed provisions that would set a requirement that 15 percent of electricity come from renewable sources by 2020. Also gone were extensions for investment and production tax credits set to expire next year for generators of geothermal, wind and solar power.

"From the standpoint of renewable energy, the compromises were certainly a missed opportunity, and they were out of step with much of the support we get from across the country," said Gregory Wetsone, director of government affairs at the American Wind Energy Association.

Incentives taken from the bill would have extended a 2-cent tax credit on wind or geothermal electricity for each kilowatt hour produced, a break that investors said would be worth thousands of dollars on individual projects. The extension was for four years, according to the office of Rep. Shelley Berkley, D-Nev.

Before it was completed, the bill also would have extended for eight years a provision worth 30 percent of development costs on completed solar installations.

John O'Donnell, vice president at Ausra, a California company that develops solar technology and facilities, said the vote created uncertainty in the American renewable market.

"We knocked down the first-ever stable eight-year tax period in (renewable) industries," said O'Donnell, who traveled to Capitol Hill this month to lobby for the industry.

"The projects Ausra builds take three to four years to plan, permit, finance, and build," said O'Donnell. "You need to know what policy will be when your bring your project on-line."

O'Donnell was in Las Vegas on Thursday announcing plans to build a 130,000 square-foot plant to assemble solar power components. He did not say whether the project would be affected by the failure of Congress to extend the tax breaks.

Karl Gawell, director of the Geothermal Energy Association, said failure to renew incentives was "creating a little bit of a chill in investors."

Gawell said geothermal interests were cheered somewhat because the bill contained $100 million for federal research into advanced methods for extracting heat from the earth to generate power.

Sen. Harry Reid, D-Nev., acknowledged in a statement that the final bill was not optimal.

"Could this bill have been better for Nevada? Absolutely. It is disappointing that we were forced to pass this bill without providing essential payments for counties and crucial incentives for renewable energy," said Reid, who this year stepped up his advocacy of renewables as an alternative to coal for energy.

Sen. John Ensign, R-Nev., opposed the extensions because they would have been paid for by increasing taxes on oil companies. He voted "no" on a key procedural motion Thursday on whether the tax provisions should be kept in the bill. The motion failed by one vote.

Ensign believed the oil taxes would have "harmed domestic production," according to Tory Mazzola, his spokesman. Mazzola said even without the tax breaks for renewables, the final bill will "increase and diversify" domestic sources of energy.

The requirement that states produce 15 percent of their electricity from renewables by 2020 was controversial throughout the debate. States in the South, for instance, argued they lacked wind or geothermal sources to meet the standard.

On the other hand, states in the West are blessed with sun and open spaces for wind, and every one in the region except for Utah and Idaho have set goals for increasing use of renewables. Nevada is slated to have 20 percent of its electricity produced by wind, solar or geothermal heat by 2015.

Contact Stephens Washington Burau reporter Jason C. Green at jgreen@stephensmedia.com or (202) 783-1760.