Financial Experts Express Alarm:
US Renewable Energy Market Momentum Threatened;
Federal Treasury Grant in Lieu of Tax Credits Due to Expire 12-31-10
At a press conference in Washington, top renewable energy finance experts warned of a potential market cliff at end of 2010 if the Treasury Grant program is not extended, threatening US renewable energy scale-up and jobs.
Washington, DC – July 21, 2010 – The United States Partnership for Renewable Energy Finance (US PREF) has identified an impending gap in federal support for renewable energy projects at the close of 2010. At a press conference today, top leaders from the financial industry warned that without extension of the 1603 Renewable Energy Treasury Grants, also known as the Grant in Lieu of Investment Tax Credit, the US renewable energy market will contract with associated loss of jobs following years of impressive market growth.
“The renewable energy industry is facing a crisis, a market cliff at the end of the year, requiring urgent action,” said Michael Eckhart, President, American Council On Renewable Energy. “The impact of the financial crisis goes on, and if not addressed, the situation risks losing thousands of jobs that were just created.”
The Section 1603 Treasury Grant program was enacted by Congress in 2009 as part of the American Recovery and Reinvestment Act to help address the impact of the financial crisis on the emerging U.S. renewable energy sector. Specifically, by providing tax grants in lieu of credits for qualifying renewable energy investments, the Treasury Grant Program has addressed a critical barrier to the continued flow of capital to renewable energy projects throughout the U.S. at a time when the economic downturn had begun to severely limit the use by investors of the tax credits that have traditionally played a central role in U.S. renewable energy policy incentives.
“The Treasury Grant program has been a success story in supporting the growth of the U.S. renewable energy sector and generating badly needed jobs for the U.S. economy,” noted Pat Eilers, Managing Director of Madison Dearborn Partners. He added, “Nearly $2 billion of 1603 grants were disbursed in 2009 which helped stimulate nearly $9 billion of new investments by the private sector in renewable energy projects and created an estimated 72,000 jobs in the wind and solar industries.”
“If the Treasury Grant Program is allowed to expire in 2010, the level of capital that is available to finance renewable energy is anticipated to decline by more than 50%, jeopardizing the installation of clean renewable power projects throughout the US and our international competitiveness,” said Neil Auerbach, Co-Managing Partner of Hudson Clean Energy Partners. He added, “The Treasury Grant program is one of our nation’s most successful renewable energy policy initiatives, creating new jobs and ensuring the US is competitive in the emerging clean tech sector.”
Marshal Salant, Managing Director at Citi, added, “With the financial crisis and associated economic downturn having greatly diminished the pool of investors able or willing to invest on the basis of tax benefits, the availability of tax equity capital is expected to remain at depressed levels that would be insufficient to meet U.S. renewable energy project financing requirements. Continued access to the Treasury Grant program is urgent to maintain investment in environmentally friendly renewable energy projects, to promote U.S energy independence, and to create US jobs.”
The Section 1603 Treasury Grant Program has played a crucial role in supporting the U.S. renewable energy market. The expiration of the Treasury Grant Program will significantly impact the renewable energy market, particularly because financial market constraints severely limiting use of the tax credits are expected to last for a few more years.
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About ACORE: The American Council On Renewable Energy (ACORE), a 501(c)(3) membership non-profit organization headquartered in Washington, DC, is dedicated to bringing renewable energy into the mainstream of the US economy and lifestyle through research and communications programs and membership committees. ACORE’S membership works in all sectors of the renewable energy industries including wind power, solar energy, geothermal energy, hydropower, ocean energy, biomass, biofuels, and waste energy. ACORE provides a common platform for the wide range of interests in the renewable energy community including end users, technology companies, manufacturers, utilities, professional service firms, financial institutions, colleges and universities, associations, non-profit organizations and government agencies. ACORE serves as a thought leadership forum through which these parties work together on common interests. ACORE co-organizes the REFF-Wall Street and REFF-West Finance Conferences, the RETECH All-Renewables Energy Conference and Exhibition, the Phase II National Policy Forum in Washington, DC, and hosts both domestic and global policy events furthering the mission of renewable energy. Additional information is available at www.acore.org.
About US PREF: US PREF is a program of ACORE. The objective of the US Partnership for Renewable Energy Finance (US PREF) is to unlock private capital flows to new, large-scale and distributed renewable energy projects in the United States. To achieve this objective, a balanced and credible group of highly experienced renewable energy financiers from financial institutions, investors, professional services firms, utilities and others, working with leading non-government organizations, have convened as US PREF. US PREF members include Bank of America Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, GE Energy Financial Services, Google, Green Order, Hudson Clean Energy Partners, Madison Dearborn Partners, Morgan Stanley, NRG Energy, Skadden Arps, SolarCity, Starwood Energy, Troutman Sanders LLP, US Renewables Group and VantagePoint Venture Partners. US PREF is a program of the American Council On Renewable Energy (ACORE), a 501(c)(3) non-profit organization. www.uspref.org
