Wind and Solar Energy Face Cloudy Future

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"Congress could vote to extend grants, but that's highly unlikely."

obama solar wind

After years of rapid growth, the future of the American renewable energy industry is uncertain.

That's because the government cash it has come to rely on may dry up on Dec. 31.

Before the Great Recession, renewable energy developments were helped by a tax credit, worth generally 30% of the cost of the project. When the recession hit, the stimulus package replaced those tax credits with direct cash grants of similar value. Cash is considered more beneficial than credit to the industry.

Congress could vote to extend the grants, but that's highly unlikely.

If they're allowed to expire, incentives for renewable energy will revert to the old tax credits.

"This is not a great place to be in," said Denise Bode, head of the American Wind Energy Association. "It's an economic opportunity that will be missed."

The wind industry is already hurting—even with the cash.

The amount of new electricity wind can generate declined 72% in the third quarter compared to the same time last year, according to the wind association.

The wind industry isn't the only one saying it will suffer.

Without the cash grant, "we'll grow at a much smaller rate," said Edward Fenster, CEO of Sunrun, a San Francisco-based company that installs solar panels on people's homes.

"On a gut level, a lot of the conservatives just don't like to see the government handing out checks to people," said Kevin Shaw, an energy lawyer at Mayer Brown. "I just don't see the grant program being extended."

But the White House does. The Obama administration has proposed a plan: Pay for it by using money left over from the stimulus package. That's led some analysts to at least give it a shot at passing.

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