Two weeks ago, Energy Secretary Ernest J. Moniz traveled to the California desert to dedicate a signature achievement of the Obama administration’s loan guarantee program: an up-and-running, utility-scale solar power plant that is the largest of its kind in the world.
“Investing in clean energy isn’t a decision that limits our economic potential — it’s an opportunity to lead the global clean technology markets that are forming right now,” Moniz said at the ceremony on Feb. 13. “We simply can’t afford to be at the back of the train — we have to be at the front, leading the world in these industries.”
The ceremony celebrating the successful investment marked a reversal from the attacks on the Obama administration’s loan guarantee program in the aftermath of the 2011 bankruptcy of Solyndra, a California solar-panel manufacturer that failed after receiving a $535 million federal loan guarantee.
“I think you’re starting to see the administration recognize the fact that some of these projects are working and, frankly, they’re good,” said Frank Maisano, an energy specialist at Bracewell & Giuliani. “They’re good projects.”
Now that the loan guarantee program has spurred the construction of five utility-scale solar plants, the industry’s attention turns to its next challenge — namely, renewal of the tax incentive program set to expire at the end of 2016.
Tax benefits for renewable energy sources have become anathema to some conservative lawmakers who say the industries have had plenty of time to demonstrate their viability without federal help, an argument made more acute by the Solyndra scandal. But solar advocates sense a shift in members’ attitudes toward the resource as more areas across the country become home to businesses that prop up the industry and create jobs.
“Where we used to be treated like an issue, we’re increasingly treated like a home-grown industry,” said Rhone Resch, president and CEO of the Solar Energy Industries Association.
The Ivanpah project Moniz visited snagged a loan guarantee nearly triple the size of Solyndra’s — $1.6 billion — for its own novel technology, which utilizes a field of mirrors to focus sunlight onto boilers atop 459-foot towers, generating steam that then turns a turbine to produce electricity. The plant, which has the capacity to produce 392 megawatts of electricity (enough to light up nearly 95,000 homes), adds to the 13 gigawatts of solar power that came online domestically by end of 2013, Resch said.
Solyndra’s failure was rooted in the economics of silicon, the chief ingredient in traditional flat solar panels. Its technology — cylindrical panels made from alternative materials — was intended to offer a viable solution to silicon after its price skyrocketed throughout the 2000s.
But the cost of the material crashed by the end of the decade, and congressional Republicans skewered the Obama administration for its management of the program.
A project like Ivanpah now shows the private sector that innovative clean-energy technologies can be feasible at scales not yet seen, Moniz said.
“We all know there are first-mover problems in terms of moving out with these new technologies at new scale, and that’s essentially what we are doing,” he said.
Tax liability is now the major focus for industry executives. The 30 percent investment tax credit applies to certain capital-intensive renewable-energy projects and has been part of the tax code in its current form since 2008 — unlike its sister benefit, the production tax credit that largely benefits the wind industry. That credit expired at the end of 2013 and has been extended at the last minute after lapsing on other occasions in the past 20 years.
The 2009 stimulus package (PL 111-5) gave solar power an even bigger boost by allowing developers to claim cash grants until 2011 instead of the credits after tax equity markets dried up in the recession.
But now that the economy is rebounding and utility-scale solar is booming, supporters say the industry needs stable tax policy that mirrors what other energy resources have in order to sustain that growth.
Solar advocates and their allies in Congress are pushing for changes to the eligibility terms for the investment credit so they mirror a major modification made to the production tax credit early last year. Sens. Michael Bennet, D-Colo., and Dean Heller, R-Nev., introduced legislation (S 2003) earlier this month to make solar companies eligible for the investment benefit if their projects are under construction — rather than up and running — by the end of 2016. House members have introduced similar legislation.
Lobbyists say such a change would make it easier for more utility-scale solar plants to get backing from the private sector before the credit’s expiration date.
For now, the outlook for tax extenders is murky as lawmakers weigh how long of an extension they need to tide renewable resources over until a broader tax code overhaul is politically feasible. Resch says the politics of solar power have “absolutely” shifted as members of both parties realize the economic benefits the industry offers.
“People recognize that solar makes economic sense and that it’s now an economic engine in more and more congressional districts and more and more states,” he said.