Geothermal Energy is Counting its Credits

Bill Opalka | Nov 09, 2011

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The prospect of Congress approving an extension of cash grants for renewable projects seems dim, but there are other tax credits for renewables that are starting to sunset that have segments of the clean energy industry concerned.

Take, for example, the geothermal energy industry and the investment tax credit.

A concern mentioned often at the recent Solar Power International conference was the impact of the 30-percent investment tax credit that is set to expire in 2016. Most observers expect it will not be renewed.

Geothermal should be so lucky. The industry was able to get an extension during the stimulus legislation that runs through 2013. Now, it would like an extension to conform to those offered for wind and solar.

The industry points out that since 2005, the U.S. geothermal market has grown from 2,737 megawatts of installed base load capacity in 2005 to 3,102 megawatts in 2010. That’s a rather small base to start from, but the project pipeline now extends to 15 states.

Tax incentives for geothermal energy expire at the end of 2013.  The Geothermal Energy Association says this isn’t enough time for many geothermal projects that are counting on the incentives.  These projects typically require between four and eight years to complete, according to GEA.

“Our nation has among the world’s most promising geothermal energy resources, but without the support of long-term tax incentives, we will not see the investment necessary to develop this invaluable domestic source of base load renewable energy,” GEA told Congress.

Going forward even more projects are under development.  According to GEA, there are projects under development in some 15 states.

GEA also said the Department of Energy has recently approved investments in several important geothermal technology research projects for the first time in decades.

In the existing tax code, geothermal incentives expire at the end of 2013, but for solar energy the 30 percent Investment Tax Credit runs through 2016.  In this Congress, legislation has been introduced to address the disparity by extending the 30 percent ITC for geothermal to 2016 as well.

A bipartisan bill, drafted by representatives and senators from western states, was recently introduced.

“We understand that a principal reason for providing solar projects the 2016 deadline was the long lead-times expected for concentrated solar power projects,” according to GEA.  “We believe that geothermal projects, with considerably longer lead times than currently faced by solar projects, warrant a comparable time frame.” 

Geothermal resources in the U.S. remain largely untapped, because of the high risk of finding and proving geothermal resources.  If the resource is to be tapped, a window longer than two years will be needed.

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