The Renewable Energy industry and the solar industry in particular has benefited from the Treasuries ITC 1603 Cash Grant program. The cash grant has allowed non-tax equity investors to be in the sector, especially for distributed generation which is much smaller in size then utility projects and does not attract tax-equity investors readily.
In conversations over the last few weeks with leaders from various renewable energy advocacy groups and industry participants working toward an extension of the ITC Grant program and other policy initiatives, there is a distinct possibility that the 1603 program could be extended again this year. The key message they are focused on getting across to Congress is the impact on downstream jobs for the various industries. Jobs were the focus last year as well, as ACORE convinced key members of Congress the potential loss of jobs if the ITC Grant was not extended. All the negotiations on ITC extension last year were compressed over a three day period very close to the wire. The fallout from Solyndra is an issue but increasingly it seems that most of the political fallout issues are now behind us. Jobs continue to be a focus for Washington and going into year-end horse trading we expect that Congress will focus on the big picture and extended the ITC Grant for a least another few years.
The tax-equity market can't meet the demand for financing of the solar distributed generation sector and the ITC Grant has demonstrated clearly that capital will flow to the sector with the right policies, especially for distributed generation. The Treasury department should be agnostic to grant payment upfront or reduced tax payments.
I'll be attending the ACORE Phase 2 meeting and conference next week and expect to have an update on the developments towards extension of the ITC Grant program and follow-up next week with an update.
Editor’s Note: John Joshi is a managing director at CapitalFusion Partners LLC an advisory firm focused on renewable energy and infrastructure project. He also runs the Carbon Finance & Securitization group on LinkedIn Mr. Joshi can be reached at: email@example.com.