With abundant land and sun, Nevada has an opportunity to become the epicenter of the U.S. solar energy industry. The Silver 5tate’s ability to lead the nation in solar power generation for both local use and for export represents an opportunity to fuel economic growth, while putting tens of thousands of Nevadans to work.
Today, there are 2,500 megawatts of utility-scale projects either currently under construction or under advanced development in Nevada, enough to power more than 350,000 Nevada homes. These facilities represent tens of billions of dollars in private investment and will support thousands of new jobs in our state. With these plants, the state also stands to receive billions of dollars in indirect economic benefits as the projects require buying goods and services from local businesses and newly employed solar workers spend their wages in their local communities.
Yet most of this growth is at risk today unless Congress acts to support solar equally with other energy resources. This means modifying the Investment Tax Credit , so that solar and other clean energy resources can qualify once construction of an energy project is commenced, rather than when the project comes online. The Senate Finance Committee recently made this commitment to wind.
Moreover, fossil generation has enjoyed permanent tax incentives for decades. Failing to even the playing field for solar would advantage other resources, jeopardize Nevada’s burgeoning solar industry and limit our state’s economic growth.
This policy change is not just good for solar or Nevada; this is smart energy policy and sets America on a path to energy independence. While bipartisan rancor still dominates Washington, President Obama and the Republican leadership have consistently agreed on our natíon’s need for an energy strategy. Both parties recognize that an energy policy which uses all of our energy resources and provides a level playing field for each to compete will provide America with a diversified energy portfolio that can protect against fuels shortages and price spikes.
The ITC works by reducing the tax liability for individuals or businesses that invest in qualifying solar energy facilities. In 2008, two years after the ITC was first passed, Congress agreed to an eight-year extension. As a stable, incentive, the ITC has encouraged private sector investment in solar manufacturing and solar project construction, growing the Industry by more than 1,600 percent.
Yet, the eight-year extension, while effective, did not account for the length of time that it takes to develop a solar plant. According to a recent research by the Solar Energy Industries Association, it took an average of 6.3 years to develop and build the 15 utility-scale solar projects currently under construction in the U.S. today. With the ITC set to expire in 2016, this puts many of the projects planned for Nevada at risk of not qualifying for the credit and not being built.
Solar developers utilizing the ITC face incredible amounts of risk based on events often beyond their business control, such as unforeseen environmental mitigation, weather disruptions and litigation. The change to “commence construction” provides the continued certainty needed so that utilities, communities, developers and lenders have a higher degree of confidence in the development process and can make informed decisions about how to proceed with the projects that are in the pipeline.
This simple change to “commence construction” also honors the original intent of the law to provide solar developers and investors the certainty needed to make |ong-term investment decisions while not creating a subsidy in perpetuity. The solar industry recognizes that it must continue to drive down costs, so that over the long term it is not dependent on government support. Making this change to the ITC is critical for the solar industry to realize this goal by encouraging further investment in utility-scale solar projects and deploying these projects at scale.
Nevada stands to gain if the solar industry continues to grow. It is incumbent upon our federal representatives to create the necessary policies to encourage continues investment in utility-scale solar projects. With a simple change to the ITC, Nevada can fully realize its potential as the epicenter of the U.S. solar industry.
Robert List is a former governor of Nevada and is currently a senior partner with Kolesar & Leatham. Richard Bryan is a former Nevada governor and United States senator and is currently a shareholder with Lionel Sawyer & Collins.