MAKING NEW ENERGY WORK IN THIS ECONOMY

Echoing in concrete terms a proposal put forward jointly by the New Energy industries, Senate Majority Leader Harry Reid (D-Nev) proposed adjustments to the New Energy tax credits that would make them practical in the current, credit-compromised circumstances and allow them to further boost New Energy’s stimulative impact on the national economy.

Both the New Energy industries and Senator Reid have also called for stimulus funding to “green” federal buildings, power federal and military installations and operations for streamlined permitting to develop New Energy resources on federal lands. (See NEW ENERGY WILL LEAD RECOVERY...)

New Energy industry studies and many private studies show such investments will create millions of new jobs and return billions in revenues to the economy while at the same time providing for the building of the 21st century’s energy infrastructure.

While the federal investments in New Energy fall well within plans likely to be part of the Obama administration’s fulfillment of its New Energy for America mandate, the idea of adjusting the federal tax credits so they can be of use under present, economically-constrained circumstances is innovative. It is enormously to Senator Reid’s credit that he sees the wisdom in the idea.

It is unconventional to award tax credits, in essence deductions, on income that has yet to be earned. The need comes because tax credits have in recent years been used to negotiate loans for multi-billion dollar wind and solar power plant installations.

Financial institutions exchanged loans to New Energy developers, in the middle years of this decade, for partial ownership in New Energy projects so as to use the tax credits to offset profits earned on other investments. Those financial institutions aren’t making loans these days and, even if they were, they aren’t earning the profits that require tax credits to offset.

Example: Abengoa Solar recently reported it cannot secure funds to go ahead on a $1 billion, 280-megawatt solar power plant in southern Arizona for which it already has a power purchase agreement from Arizona Public Service.

By making New Energy’s tax credits payable in advance, developers like Abengoa can use the money to finance their own projects. Because the projects generate emissions-free energy for which there will surely be ongoing high demand, there is little question they will eventually earn the tax credits.

Senator Reid: "We have to do renewable energy no matter the state of the economy…The whole country is not secure as long as we're importing 70 percent of our oil…"

Both Senator Reid, a Democrat, and Nevada Governor Jim Gibbons, a Republican, touted New Energy to the media Tuesday as a source of energy independence and economic growth, arguments gauged especially to appeal to Nevadans. Both also spoke out in favor of developing new transmission for New Energy in the state.

Gibbons’ comments followed a meeting of his Renewable Energy Transmission Access Advisory Committee. The committee reviewed maps developed over the last 18 months that show how Nevada geothermal, wind and solar resources can be linked to an interstate power grid.

Governor Gibbons: "We're rolling out a comprehensive plan to utilize renewable resources within the state and for export to markets outside Nevada…This puts Nevada about a year ahead of every other state interested in doing similar things…Nevada can truly become energy independent with this plan, and all we have to do now is to modernize our electrical grid infrastructure -- and we're on our way to having a completely new legacy for the state…"

Good plan. So good Senator Reid has called for a similar one at the national level.

Senator Reid on New Energy. From SenateDemocrats via YouTube.

Reid: Why wait for tax breaks?
John G, Edwards, December 17, 2008 (Las Vegas Review-Journal)

WHO
Senate Majority Leader Harry Reid (D-Nevada); Republican Nevada Governor Jim Gibbons

WHAT
Reid proposes to extend all New Energy tax credits and to make them refundable in advance as part of the economic stimulus package. Gibbons is advocating transmission development in Nevada.

Nevada has the best geothermal resources in the U.S. (click to enlarge)

WHEN
- Part of Reid’s proposed legislation will extend all the New Energy production and investment tax credits for 8 years, matching the length of the extension provided to the solar energy industry’s investment tax credit in October legislation.
- Nevada’s Public Utilities Commission this month approved the Southwest Intertie Project, which should be completed by 2011.

WHERE
- Senator Reid announced his intentions to develop the innovative policy in the Senate following a meeting on priorities with leaders in his home state.
- Nevada is one of the richest states in solar and geothermal resources but the resources are remote from the population centers. Excellent solar power plant sites cover Southern Nevada and there are wind and geothermal resources in the western, central and eastern parts of the state.
- The Southwest Intertie Project runs 200+ miles from around Ely to near Las Vegas.

WHY
- Reid has long been an advocate for Nevada’s as-yet inadequately developed New Energy resources. He now is talking about the building of new transmission in the state to deliver energy from remote geothermal and solar power plants to the population centers.
- An 8-year extension of the tax credits would provide a stability New Energy has never known in the U.S.
- Making the tax credits refundable in advance would provide capital, especially to big producers, that would facilitate development.
- The meeting in Las Vegas allowed Reid to get feedback from his constituency on priorities. The 1st hour was closed to the media so as to facilitate straight talk.
- While Reid held his meeting, Governor Gibbons' met with his Renewable Energy Transmission Access Advisory Committee in Las Vegas.

Only one place is hotter than Nevada and Satan is Governor there. (click to enlarge)

QUOTES
- Senator Reid: "We really do believe we can be energy independent (in Nevada)… We have huge amounts of renewable energy (in Nevada), but we haven't developed it all."
- Governor Gibbons: "The geothermal and wind energy potential in Northern Nevada is enormous, as is solar energy potential in Southern Nevada…"