Solar Stalls in the Senate

Not just solar, of course. All branches of the renewables industry suffered another real frustration yesterday when the Senate, once again, failed to extend the renewable energy tax credit, thanks to a Republican filibuster. One wonders if they were reading the Yellow Pages to keep the filibuster going, or perhaps something more relevant, like, say, the quarterly reports of oil companies? Analysts are saying the fault is partly the Democrats‘, too, for failing to separate out “controversial” issues in the bill from the tax credit, although I’m not sure when funding for renewable energy under the Bush administration ceased to be controversial.

The most controversial provision in the bill seems to be the removal of a tax break loophole for oil and gas companies (I know, I know, contain your surprise). The Dems want to fund this new tax credit essentially by raising this specific tax on oil and gas, and the Republicans are quick to shout “tax hike!” While it seems likely that the bill will pass if the Dems push it through again this summer and take out this provision, it’s possible that it actually won’t come to the Senate again until around election time, and who can predict how that will affect the outcome? At this stage of the game, the presidency is already fairly lame-duck, with Congress remaining more vital; but on the brink of a turning of the tides, the whole system might stall out.

The failure of the Senate to pass this bill comes in the same week as a new study predicting that 10% of US energy will be solar by 2025, thanks largely to the role utilities have to play in adopting the technology. Released by Clean Edge, Inc. (linked to GreenBiz.com) and the Co-op America Foundation, the report projects that ten years from now, “solar power will be cost-competitive in most regions of the U.S. on a kilowatt-hour (Kwh) basis,” even if some “disruptive” event or force occurs to the market or technology. Getting to this point won’t be a cheap ride, the authors note:

Our figures show that the investment will be between $400 billion and $500 billion to install the required PV and an additional $50 billion to $60 billion to install the required CSP to reach the 10 percent target. That’s a total projected price tag of between $450 billion and $560 billion between now and 2025, an average of $26 billion to $33 billion per year. [These figures] represent procurement and installation capital costs paid for by utilities, businesses, residences, governments, and others installing solar systems. In this scenario, solar would represent more than half of all new generating capacity installed in the nation by 2025.

If the government can’t get it together to properly incentivize growth in the industry, however, I wonder how the bright future depicted in this report will be affected. I think renewable energy, and solar in particular, is so attractive as an investment and as an energy source that the market should, on its own, encourage enough growth and R&D to bring the technology to cost parity with traditional energy sources sooner rather than later. (For a much more detailed discussion of a related topic, check out Adam’s great post on Monday about climate change regulations.) But if the government can’t level the playing field by making the tax horizon as approachable for solar as it currently is for gas and oil…well, can you blame the big players for not getting in on the action?

If both parties are as dedicated to diversifying our energy resources as they claim: Pass that bill already!