photo: eSolar
After months of failed attempts in Congress to extend crucial renewable energy tax credits, the end-game came with lightning speed Friday afternoon: The House of Representatives passed the green incentives attached to the financial bailout package approved by the Senate Wednesday night and President Bush promptly signed the legislation into law.
There were goodies for wind, geothermal and alternative fuels, but the big winner by far was the solar industry.
“It feels like we should be popping the champagne,” said a Silicon Valley solar exec Green Wombat met for lunch minutes after Bush put pen to paper.
That it took the biggest financial crisis since the Great Depression to save billions of dollars of renewable projects in the pipeline for the sake of political expediency does not bode well for a national alternative energy policy. But the bottom line is that the legislation passed Friday sets the stage for a potential solar boom.
- The 30% solar investment tax credit has been extended to 2016, giving solar startups, utilities and financiers the certainty they need for the years’ long slog it takes to get large-scale power plants and other projects online. The extension is particularly important to those Big Solar projects that need to arrange project financing in the next year or so.
- The $2,000 tax credit limit for residential solar systems has been lifted, meaning that homeowners can get a 30% tax credit on the solar panels they install after Dec. 31. That will save a bundle – especially for those who live in states with generous state rebates – and goose demand for solar panel makers and installers like SunPower (SPWRA) and First Solar (FSLR). (If you buy a $24,000 3-kilowatt solar array in California – big enough to power the average home – you can claim a $7,200 federal tax credit. Add in the state solar rebate and the cost of the system is cut in half.)
- Utilities like PG&E (PCG), Southern California Edison (EIX) and FPL (FPL) can now themselves claim the 30% investment tax credit for large-scale solar power projects. That should encourage those well-capitalized utilities to build their own solar power plants rather than just sign power purchase agreements with startups like Ausra and BrightSource Energy.
“The brakes are off,” says Danny Kennedy, co-founder of Sungevity, a Berkeley, Calif., solar installer that uses imaging technology to remotely size and design solar arrays. “In just six months since our launch we’ve sold about a hundred systems. With an uncapped tax credit for homeowners going solar, we expect business to boom.”
While elated sound bites from solar executives have been flooding the inbox all afternoon – along with invites to celebratory after-work drinks – solar stocks took a drubbing (along with the rest of the still-spooked market) after initially soaring on the news.
SunPower ended the trading day down 5% while First Solar shares dropped 8%. The bright spot was China’s Suntech (STP), which on Thursday announced a joint venture with financier MMA Renewable Ventures to build solar power plants as well as the acquisition of California-based solar panel installer EI Solutions.
Congress didn’t treat the wind industry so generously. The production tax credit for generating renewable energy was extended by just one year, guaranteeing the industry’s will continue to live year by year (at least through 2009). But given that 30% of all new power generation built in the United States in 2007 was wind, and that the amount of wind power installed by the end of 2008 is expected to rise 60% over the record set last year, the wind biz should do just fine.
But Congress did give a break to those who buy small-scale wind turbines. Systems under 100 kilowatts qualify for a 30% tax credit up to $4,000. Homeowners get a $1,000 tax credit for each kilowatt of wind they install, though the credit is capped at $4,000.
“This is a huge breakthrough for small wind,” says Scott Weinbrandt, president of Helix Wind, a San Diego-based manufacturer of 2-and-4-kilowatt turbines.
Green Wombat 
Does anyone know when the new 30% tax credit for solar goes into effect?
thanks!
PG&E in California just raised electric rates in California by 6%, further increasing the appeal for solar in one of the largest solar markets outside of Germany and Spain.
Do you have any idea why solar stocks ended down after such good news?
The 30% residential solar tax credit applies to solar systems installed after December 31, 2008.
Solar stocks fell most likely fell in response to overall market jitters about whether the bailout package would cure the financial crisis.
This is great news for a state like Nevada, with almost no industries, but plenty of sun. We just got the Ausra fabrication plant in Las Vegas (solar trough), and it would be nice to see this technology take off.
Will the tax credit be all in the year it is installed? Thank you. Kathy M. Olympia, WA
Typical Washington hogwash. The BAILOUT plan was so vital yet we have to add on all this pork to get it passed? I hope America wakes up and votes everyone involved in this socialist coup out of office.
An important question for middle of the road homeowners like myself is: Are the credits refundable?
This is a great news for solar sector. Now we know that starting next year, all commercial and residential solar projects will receive 30% tax credit without any caps. This will create many jobs and a new industry that will prosper many years down the road.
So, which company should you invest? Should you invest in the companies that install solar panels or manufacture companies that produce the panels itself? This remind me about AT&T and Lucent Technology where one is a installer (AT&T) and the other is a manufacture (Lucent).
Lucent was a high flying stock when the demand for telecoms equipment exceeded the supply. This will be a same thing for solar business. In the next couple of years, you’ll see many installation companies throughout the states, which means the demand for solar panels will exceed the supply.
Companies that you would want to invest are LDK (will be the largest solar manufacture in the world), Suntech Power (STP), SunPower (SPWRA), Yingli Green Energy (YGE), JA Solar (JASO), DayStars Technology (DSTI), Hoku Scientific (HOKU), and ReneSola (SOL). These are polysilicon based solar companies except Daystars, it uses thin film technology which is not toxic. First Solar also use thin film technology, but its product is very toxic.
I hope you all will do your due diligent prior to any types of investment. Solar is here and it will stay. With the new technology coming down to the pipe line, this industry is set to boom.
That is the best news for people who care for the earth! There should be tax credit for those who use public transport, as well.
And all this should be compensated by putting taxes on green house gas generating energy sources.
The tax credit is taken the year the equipment is PUT INTO SERVICE, which might be different than the year installed.
Remember, these factors have already been added into the stock prices about a month ago. This does NOT mean to run out and buy Solar and alternative energy stocks.
These companies all have and/or require large amounts of debt, not only for themselves, but also their end users. It’s a bad time to need capital and oil prices are dropping so solar’s advantages over other energy sources shrink somewhat. That being said, the stocks have been destroyed and if/when the market recovers, these stocks will move considerably. If Obama is the president, you can bet more funding will be coming to this group. They are all speculative in nature and should be viewed as such. There might be another 50% of downside for them or they might bottom tomorrow. If you need to be there, tread softly (i.e. build small positions).
can any body analysis why solar comp8any carsh
Just because oil is TEMPORARILY set at a lower than average price, doesn’t mean that the benefits of renewable energy are small. Remember, renewable energy is essentially free, except the costs associated with initial start up and maintenance. Oil will never triumph over clean, renewable energy and I pity anyone who thinks otherwise.
Try tracking solar stocks using three simple moving average indicators (12, 52 and 104 week). When the 12 crosses 52 and 104 is on the way up. It may be a good time to buy.
People are missing the niche side of clean energy and thats clean storage.
nasdaq BCON http://www.beaconpower.com
Solar energy didn’t work in the past; and most likely it won’t work in the future unless you are in the Congressional Office, and your name is Al Gore! They have a plan to make the United States part of N.A.T.O. or the U.N. in which they plan on the United States paying up to 10Billion Dollars they said the U.S. is the worst polluter; which is a LIE! (Fines?).
We need to get out of the U.N. and the N.A.T.O agreement & Especially the N.A.F.T.A! THE RICH (CONGRESS) GET RICHER AND THE POOR GETS POORER UNDER
some of their plans! And the Middle Class; will disappear forever! That is what Communism & Socialism is!!!!!!
FOR GOD AND COUNTRY! HEAVEN HELP US!
WAKE UP AMERICA, BEFORE IT IS TOO LATE!
An earlier comment suggested tax credits for people who use public transportation. We already have something much better – SUBSIDIES. The fares for public transportation are subsidized by the taxpayers. People who use public transportation pay only a fraction of the real cost of their ride.
“Solar energy didn’t work in the past; and most likely it won’t work in the future”
Where have you been? Germany has made good progress in this area, as the ignorance level seems to be far lower, and less govt folk (particularly like those from TX) are not in bed with the oil business. It’s ignorance such as this, that have prevented us from being far down the road – like we should have been – by now….
Eileen Pharr from TX,
The United States is a member of both NATO and the UN. In fact, your country is part of the security council of the UN. Welcome to 2008!
People beware:
These tax credits have fine print.
I should have received a tax credit of a few thousand but because the amount of my tax credit combined with my tax refund (strictly due to paying too much into the system) exceeded some arbitrary amount, a third of my tax credit was taken away.
Now would this have happened had I been an oil comany?
yall Americans are so spoiled, you think this is the end? Think you hit rock bottom? Wake up folks, yall one of the wealthiest in the world, meaning got lots of wealth to lose…
even at your rock bottom, the majority of the world got it worst so be sensible… I am an American myself, just seems a lot of us think of solely the US rather than in the international context, including developing countries and some without even a government. Quit acting spoiled.
I am a big believer in solar, however if you want to solve the energy problem and polution we need to talk about over population or it’s a losing game.
I’M SO GLAD SOLAR IS COMING BACK, BUT THEY NEED TO DO SOMETHING TO IMPROVE THE TECHNOLOGY SO THAT IT IS CHEAPER, THEY NEED MONEY FOR RESEARCH, INCENTIVISED RESEARCH, NOT JUST SITTING BACK IN THE LAB. MONEY FOR NEW TECHNOLOGY. THE TAX CREDITS ARE CRAP I AGREE.