Federal energy bill pros and cons

The federal energy bill has another critic. The American Solar Energy Society parted ways with other renewable energy advocates by declaring its disapproval of the proposed bill. The organization’s opposition stems from the heavy tilt in favor of oil, gas, coal and nuclear power companies.

Even though the bill has some positive incentives for efficiency, renewable energy and renewable fuels, it increases our dependence on non-renewable energy sources.

The society’s position is in marked contrast to the views of their usual allies. The American Wind Energy Association, the Solar Energy Industries Association, the Geothermal Energy Association and the Hydrogen Association all support the legislation. Financial incentives will expand renewable energy production and job growth in the United States.

Farm interests such as the Corn Growers Association and the American Farm Bureau also support the bill because corn-based ethanol production will double to 5 billion gallons per year.

With the exception of the ethanol incentives, incentives for efficiency and renewables, while diverse and helpful, are inadequate to challenge the dominance of fossil fuels and nuclear power. A partial list of the incentives reveals why they appeal to most of the renewable energy interests.

A residential tax credit of 15 percent of the cost of both solar water heating and solar electricity up to $2,000 for each system installed offers immediate benefits to the industry. When combined with state incentives such as the rebates and grants available in Illinois, the credit helps decrease the costs to potential owners.

Production tax credits per kilowatt hour, a major stimulus behind the growth of wind farms, will be extended to include solar technologies as well. The credit rate will be 1.8 cents per kilowatt hour for the first five years of production.

Provisions to fund up to $60 million annually through 2008 to install 20,000 PV systems on federal government buildings would add 150 MW of solar electric capacity to the national grid.

The federal government would also be required to obtain 7.5 percent of its electrical service from renewable energy sources by 2011. However, an effort to place such a standard on all electrical utilities in the nation is not included.

States will be required to establish net metering rules for all customers within two years. This will help Illinois residents outside ComEd’s service area who do not have the benefits of net metering.

States are being encouraged, not required, to establish “Time of Use” metering for all customer classes. This provision would allow utilities to charge higher prices during times of peak demand. The higher costs will stimulate more efficient use of energy and demand for solar electric installations, which provide power during sunny summer days when electrical consumption soars due to air conditioning use.

Efforts to increase the reliability of the electrical grid call for increased use of distributed solar electricity. Production incentives for facilities using renewables to provide uninterruptive power supplies to meet national security needs are provided in the legislation.

Renewables research spending is authorized to increase annually for each of the next five years.

Hydrogen production also benefits. $1 billion is targeted to produce hydrogen from coal and another $1 billion is targeted to produce hydrogen from nuclear power. One half billion dollars is targeted to produce hydrogen using solar concentrating collectors.

Incentives such as those described have won support for the bill’s passage by many renewable energy advocates. With the difficult federal budget situation, it remains to be seen whether all the promises to renewable energy will be backed by federal dollars over the next few years. Advocates are already rallying the troops to assure Federal funds are forthcoming if the bill is passed.

The bill as it is written will help stimulate the renewable energy industry, but it fails to increase the relative presence of renewable energy in the economy. It also has served to split the coalition of green power advocates and environmental interests who have successfully worked together for years to encourage government policies supporting energy efficiency and renewable energy.

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