NEW ENERGY IN ARIZONA CELEBRATIVE

No industry’s scramble to get a grip on today’s economic and financial circumstances is more interesting than New Energy’s efforts.

That’s because 3 things hit New Energy simultaneously, not just the 2 that hit most of business and industry.

Everybody has to figure out what to do about the financial crisis and the rescue package passed to alleviate it.

New Energy has to figure all that out while including into the equation how to respond to the extension of the New Energy tax credits bundled into the rescue package.

Does the extension of the credits mean boom times for New Energy? Does the financial crisis mean the end of ready financing for New Energy projects? Will the rescue package restore financing or squelch the boom?

In Arizona, (1) utility Arizona Public Service Co. (APS) immediately realized it could move forward with its plans for the Solana Generating Station, a 280-megawatt solar power plant, because Abengoa Solar S.A., the developer, will get its investment tax credits (ITCs), AND, (2) APS and utility Salt River Project are considering plans to build THEIR OWN solar power plants, because the law extending the credits also, for the first times, allows utilities (and not just developers like Abengoa) to earn the tax benefit.

Arizona residential installers are reporting new action, now that the credits are sure to be in place. Mark Holohan, president, solar installer Code-Electric: “I just filed a 200-kilowatt reservation recently, now I have a customer asking me to show them the new numbers before the ink is dry…”

Two changes in the availability of the tax benefits are expected to support further action for residential installers. Homeowners who use the alternative minimum tax (AMT) credit can now more easily use the solar ITC, too. More importantly, there is no longer a $2,000 cap. Homeowners now get the ITC for the full value of the solar systems they install.

The wind power industry expects to be able to proceed with its development plans in Arizona, now that its production tax credit (PTC) has been extended for another year.

Developers in both industries show no sign of anxiety about the other side of the market situation, the financial crisis and likely credit crunch.

Maybe that’s because the sun is so bright and the winds are so sharp in this rugged western state. Or maybe it’s because only the good news has hit home so far.

Arizona's solar resources are incredible. (click to enlarge)

Arizona solar, wind officials buoyed by bailout, credit extensions
Patrick O’Grady, October 3, 2008 (Phoenix Business Journal)

WHO
Arizona's solar and wind energy industries; Arizona Public Service Co. (APS); Salt River Project; Abengoa Solar S.A.; Greater Phoenix Economic Council (GPEC)

WHAT
Arizona’s New Energy industries are so far seeing only a big boost from the 8-year extension of the solar investment tax credit (ITC) and the 1-year extension of the wind energy production tax credit (PTC). Impacts from the financial crisis and resulting credit crunch are not yet being reported.

Arizona and New Mexico are developing a new transmission system in anticipation of their solar power plants producing power for export to the Northwest and Midwest. (click to enlarge)

WHEN
- ITC extended through 2016, allowing time to build lots of solar power plants in the Arizona desert.
- PTC extended through the end of 2009, allowing time for a new administration to legislate a long-term extension.
- 2006: Arizona enacted a renewable energy standard through the Arizona Corporation Commission.

WHERE
- Abengoa Solar S.A. is based in Spain
- Its Solana Generating Station will be built near Gila Bend, AZ
- TPI, based in Scottsdale, AZ. manufactures turbine blades for U.S., Mexican and Chinese installations.

WHY
- Arizona established a Renewable Electricity Standard (RES) in 2007 requiring state-regulated utilities to obtain 15% of their power from New Energy sources by 2025. 4.5% must come from solar energy.
- With the “solar carve out” in the RES, the solar tax credit is expected to have the biggest impact in Arizona.
- Abengoa’s Solana Generating Station will have a 280-megawatt capacity.
- With the RES, the 8-year ITC extension, the Greater Phoenix Economic Council is pushing hard to develop solar manufacturing facilities and jobs.
- AZ experts say that extension of the tax credits will drive solar energy industry technological innovation.

Arizona has modest wind resources that can be quite usable. (click to enlarge)

QUOTES
- Jim McDonald, spokesman, APS: “We¹ve been confident that this legislation was going to get passed…”
- Barry Broome, president and CEO, GPEC: “Now that the uncertainty for solar industry projects in the U.S. has been eliminated, it is critical that Arizona act quickly to capture these opportunities to help diversify our economy and propel us as a solar leader,” said
- Mark Holohan, president, Code-Electric: “It’s a strong message of endorsement at the federal level that solar is the right thing to do…”
- Sean Seitz, president, American Solar Electric LLC: “Today’s historic vote in the U.S. Congress established the foundation of what will become the world’s largest market for photovoltaic power systems…The expansion and eight-year extension of the federal tax credit for residential solar electric property is the cornerstone of this foundation. When combined with Arizona’s existing incentives, the uncapped 30 percent federal tax credit creates an unprecedented opportunity to own a residential solar electric power system.”
- Steven Zylstra, president/CEO, Arizona Technology Council: “This is great news…Without the solar tax credit extension, the demand side of the solar industry in Arizona would have been stifled. Lower demand translates into few customers for the technology producers, system installers and utilities.”
- Steven Lockard, CEO, TPI Composites: “We are very pleased that Congress extended the Production Tax Credit for wind, enabling our industry to continue our rapid growth and U.S job creation…In 2009, we hope the focus turns to providing long-term stable policy to support continued expansion of wind energy”