Reuters - 4 Aug 09

Prof. Robert B. Laughlin
Department of Physics
Stanford University, Stanford, CA 94305
(Copied 17 Aug 09)

Bills Would Boost Renewable Energy, Storage

By John Gartner
Tuesday, August 4, 2009 10:28am EDT

When Congress returns from its summer vacation it will consider legislation that could energize investment in renewable energy projects with an almost "cash for clunkers"-like fervor.

Like the cash for clunkers legislation (and American Idol, and The Office), a feed-in tariff bill would be a ripoff of a European idea modified for American consumption. Bills that would require utilities to pay a premium for renewable power have been tried and failed here before, but the time (and composition of the Congress) may be right for the fight to take flight.

Introduced by Democratic Senators Jay Inslee (WA) and Bill Dellahunt (MA), the bill would guarantee a market for the renewable power projects and would do much to calms fears in today's skittish investment arena. Feed-in tariffs have been overwhelmingly successful in Germany and Spain, basically creating the solar industries in both those countries.

Because a feed-in tariff promises American jobs and reduces foreign energy dependency, Congress will likely give the idea more of a fair hearing when the leaves begin to turn in DC.

Introduced by Democrat Ron Wyden of Oregon in May to no fanfare, the Storage Technology of Renewable and Green Energy Act of 2009 (S.1091) would create substantial tax credits for investment in storage projects that would accompany renewable energy projects.

Per the official summary, the bill would amend the IRS code to:

(1) allow a 20% energy tax credit for investment in energy storage property directly connected to the electrical grid (i.e., state systems of generators, transmission lines, and distribution facilities) and designed to receive, store, and convert energy to electricity and deliver such electricity for sale;(2) make such property eligible for new clean renewable energy bond financing;(3) allow a 30% energy tax credit for investment in energy storage property used at the site of energy storage; and(4) allow a 30% nonbusiness energy property tax credit for the installation of energy storage equipment in a principal residence.

As previously reported, the renewable energy industry doesn't like to admit that storage should be part of their equation, but in many applications the investment can be more than worth the cost. Tax incentives that would make it more cost effective to bundle storage with wind and solar projects would eliminate some of the resistance and just might get more "old guard" energy folks to be open to intermittent power sources. Utilities who are resistant to change would lose their knee-jerk reaction to say that renewable energy isn't dispatchable.

This bill could help to accelerate the slow reduction in the cost of energy storage per kWh by encouraging more r&d investment.

John Gartner is Editor in Chief of Matter Network and an Industry Analyst for Pike Research