• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 3 mins Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 6 hours Hong Kong protesters appeal to Trump for support.
  • 4 hours Millennials: A boil on the butt of the work ethic
  • 5 hours A little something for all you Offshore swabbies
  • 18 hours Iran Vows Major War Even If US Conducts "Limited Strikes"
  • 13 hours Ban Fracking? What in the World Are Democrats Thinking?
  • 16 hours Europe: The Cracks Are Beginning To Show
  • 25 mins When Trying To Be Objective About Ethanol, Don't Include Big Oil Lies To Balance The Argument
  • 4 hours Memorize date 05/15/2018 cause Huawei ban is the most important single event in world history after 9/11/2001.
  • 37 mins LA Times: Vote Trump out in 2020 to Prevent Climate Apocalypse
  • 3 hours Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 6 hours US and China are already in a full economic war and this battle for global hegemony is a little bit frightening
  • 4 hours Shale profitability
  • 13 hours Let's shut down dissent like The Conversation in Australia
Alt Text

Home Energy Storage Capacity Breaks Records In US

As costs for battery storage…

Alt Text

Oil Prices Must Drop Sharply To Compete With EVs

The long-term breakeven oil price needs to…

Alt Text

European Carmakers Face Perfect Storm

Much stricter emission caps, high…

James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

More Info

Premium Content

How Will Renewable Energy Fare in 2012?

Renewable energy is considered the future. The best way for us to combat climate change, survive the decline of oil and generally provide cheap, safer, secure energy. However the industry is still in its infancy and relies heavily on government subsidies and tax incentives. Every year or two the renewable energy companies experience a few tense months as the subsidies and incentives approach their expiration date. Invariably Congress comes to the rescue at the 11th hour and extends them for another year or two, the companies can breathe a sigh of relief and everyone can enjoy the holidays relatively stress free. However this year could prove to be different. We are in the midst of a presidential election year where the Republicans are using the bankruptcy of Solyndra to slam the Obama administration’s green energy policies. As a result Congress may well let the tax breaks die.

During the depths of the recession in 2009 the Obama administration gave renewable energy developers the option of taking a 30% tax credit as there weren’t many project financiers left with sufficient profits. Congress at the end of 2010 extended the program for another year, and now time’s up.

According to Joe Desmond, senior vice president of communications and government affairs for BrightSource Energy, fears that the solar industry would just be back in 12 months time asking for another extension are erroneous. The extension is only needed to bridge the gap until the economy improves sufficiently and a permanent financing program can be created. “As soon as the economy recovers, it takes the burden off of having to request an extension.” he said. He makes the point that, “the problem remains … there are tax equity investors out there. But it remains insufficient to serve the anticipated demand moving forward until the economy recovers.” Or, to put it another way, there are too many projects, such as the multibillion-dollar solar thermal power stations BrightSource builds or the residential rooftop photovoltaic systems SolarCity leases, and too few investors.

The Solar Energy Industries Association conducted a survey that found that nearly 37,000 jobs would not be created in 2012 if the cash grant program expires at the end of 2011, and that would be on top of the jobs lost due to renewable energy companies going bankrupt without the federal support. “More than 100,000 Americans work in the solar industry, double the number in 2009,” Rhone Resch, the chief executive of the solar trade group, said in a statement. “Solar is a proven job creator at a time when the unemployment rate for the country remains stubbornly high.”

Desmond also noted that two of BrightSource’s solar power plants set for production will create $800 million in wages, with each employing more than a thousand workers. Meanwhile, The American Wind Energy Association has released a study that predicted an extension of the production tax credit would create 54,000 jobs over the next four years.

Without the grants all renewable energy projects would rely on pre-grant incentives, such as tax equity markets, but the tax equity market still hasn’t recovered since the 2008 crash. According to Jeff Davis, a partner and co-head of the renewable energy practice at Mayer Brown, “we are still in a situation that we've been in since 2008 where the tax capacity or the ability to monetize those production tax credits and investment tax credits hasn't really recovered."

Jonathan Postal, senior vice president at Main Street Power, thinks we'll see more innovation in deal financing, similar to before the grant was passed. "You're going to need multiple partners, different ownership structures. Banks aren't going to just do the financing,” he said, "it's going to make things significantly more challenging.”

Financiers in the renewable energy market have all agreed that 2012 will be tough, no matter how you look at it. That, whilst the beginning of the year should be fine due to the completion of projects that began under the grant, the second half could well be very difficult.

By. James Burgess of Oilprice.com

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • wws on December 20 2011 said:
    actually, natural gas is the future, for at least the next 100 years.So everything after your first line is nonsense, except the part about 2012 being hard for renewables. So will 2013, and 2014, and 2015, and 2025, and 2035, and 2085. For our lifetimes, renewables are dead. Let them die in peace.
  • Fred Banks on December 20 2011 said:
    Solar and other renewables have a place in the scheme of things, but not the place that some of the ignoranuses in this country - Sweden - believe. And it is really sad when intelligent people forget how to add and subtract, which is all that it takes to comprehend how the energy future should look.
  • Fred Banks on December 21 2011 said:
    Natural gas is the future, and for the next 100 years. I don't believe that natural gas is the future, but I could be wrong if the issue is the next forty or fifty years...MAXIMUM.But a hundred years...100 years. What school did this man attend?

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play