Senate Sends Energy Tax Credits Back to House

The House and Senate have bickered over how to pay for the overall tax-incentive package in the past. The House wants all of the incentives to be paid for by tax increases and spending cuts elsewhere, while the Senate hasn't done the same for its version of the tax package -- including the one passed Wednesday night.

The energy-tax credits approved by the Senate Wednesday would all be paid for by several means, including delaying tax deductions for domestic oil and gas production by U.S. companies and boosting reporting requirements for stock sales by brokers.

Some solar companies [such as SunPower (SPWR Quote)] have said they wouldn't be able to build more U.S. power plants without the investment-tax credits. But whether a lack of tax credits would severely curb renewable-energy developments is debatable. Investors have continued to pump record amounts of money into solar, biofuel and other renewable energy companies.

The Senate bill would extend the investment tax credits for solar developments for eight years. Unlike the current tax-credit regulation, the bill would allow utilities to take advantage of the incentives.

The Senate proposal also includes production-tax credits for renewable-energy power plants that are already producing electricity. The legislation extends the production-tax break by one year for wind and by two years for solar, biomass and hydropower.

The bill would allow for $800 million worth of bonds to pay for power plants using wind, biomass, geothermal, garbage and other sources.

Consumers would receive a $2,500 to $7,500 rebate for buying plug-in electric cars and trucks.

Consumers who want to install solar panels on their properties would benefit from the bill, which extends investment-tax credits for eight years and eliminates today's $2,000 cap on the credits. It would also allow homeowners installing small-wind equipment and heat pumps to take advantage of the credits, but the amounts would be capped at $4,000 for wind and $2,000 for the heat pumps.

TheStreet.com TV: Solar Energy: Can You Afford It? (Video, Oct. 1)

Julia Hamm of the Solar Electric Power Associationtells Debra Borchardt that solar is striving to become more affordable for the residential market.

To watch the video, click the player below: