By South Florida Business Journal

A federal grant program that has propped up the solar industry through the recession to the tune of $3 billion is set to expire, and the industry is once again scrambling for a congressional fix.

If you think youâ¿¿ve heard this song before, you probably have. Two years ago, the solar industry scrambled to get a federal investment tax credit extended as it set to expire at the end of 2008.

The 30 percent tax credit extension was finally passed in 2008 with the first thrown-together Emergency Economic Stabilization Act.

But, for solar companies to use the tax credit, they needed to be profitable or find an investment partner that was. Most solar companies did not have enough profit to use the tax credit themselves.

So, Congress again stepped in, passing a grant in lieu of tax credit with the February 2009 stimulus program that paid the 30 percent credit in cash upfront to solar developers or owners. That eased the burden of finding a tax equity partner and drove growth in the solar industry from October 2009 until today.

The grant is set to expire at the end of the year. And the solar industry is pushing, yet again, for a two-year extension of the grant program.

⿿On a national basis, it is crucial,⿝ said Paul Farren, owner of The Energy Store, a solar panel and environmental products retailer in Hollywood.

But, sales of solar panels at The Energy Store have already been heavily impacted because the Florida legislature allowed the stateâ¿¿s solar rebate program to expire this year, Farren said. The popular state program, which paid homeowners up to $20,000 and businesses up to $100,000 for installing electricity-producing solar photovoltaic systems, is another victim of Floridaâ¿¿s budget crunch.

Arno Harris, CEO of solar developer and financier Recurrent Energy in San Francisco, says availability of tax equity is about half of demand and without a grant extension, those with tax equity appetite will pick the most desperate developers and charge high premiums to take the tax equity off their hands. He sees some hope in that some new tax equity players have recently begun to dip their toe into solar financing.

⿿That⿿s got to happen, but the reality is we⿿re trying to make up a $5 billion gap and nobody jumps into a new market with a billion dollars,⿝ Harris said. ⿿Even Google will take baby steps.⿝

Copyright 2010 American City Business Journals

Copyright 2010