An Open Letter to Congress
by Michael Vickerman, RENEW Wisconsin
July 10, 2008

If you want to know more about the economic, environmental and security benefits from renewable energy development, look no further than my house in Madison, Wisconsin. A crew from a local solar contractor just finished installing a solar electric system that will, when activated, produce about one-half of the electricity used in our household.

As you very well know, federal tax credits have been the principal policy tool for accelerating renewable energy development in this country. Right now, most renewable energy technologies are more expensive than fossil fuels, but the federal incentives level the economic playing field, providing breathing room for solar, wind and biogas to mature and become cost-competitive. This has been especially true with wind generation, which expanded from 6,500 megawatts in January 2005 to over 19,000 today. This tripling of windpower capacity in less than four years could not have happened without the production tax credit being in place during that time.

Here in Wisconsin, the renewable energy marketplace has exploded over the last three years, especially in the solar arena. As of this moment, there are 73 full-service solar electric and solar hot water installation firms active in Wisconsin, more than double the installer base in 2005.

How critical is the solar tax credit in driving solar’s growth? If our middle-class household is at all representative of the solar-installing customer base, I can honestly say that the federal incentive was a necessary component to making that investment work for us. Had federal incentives not been available this year, our budget would have been insufficient to absorb the substantial up-front expense that comes with owning a solar energy system.

Indeed, when I compare the flurry of installation activity now with the near-dormant conditions that prevailed just three years ago, it’s clear that the federal tax credit has greatly expanded the size of the domestic solar energy market.

Extending the renewable energy tax credits would cost U.S. taxpayers somewhere between $3 and $4 billion a year, most of it going to wind generation. Some members of Congress consider that an unacceptably large expense. But these are not permanent incentives. In the case of windpower installations, which have a book life between 20 and 30 years, federal tax credits cover no more than 10 years of operation.

But it’s a telling measure of Beltway cluelessness that our federal lawmakers are more willing to make a show of fiscal discipline on renewable energy policy than on an overseas military operation that now drains about $120 billion a year from the U.S. Treasury.

The U.S. economy is on the ropes. The U.S. can ill afford to skimp on the one energy pathway that can, with the proper policy support, create jobs by the thousands and convert capital into socially productive and sustainable enterprises.

If Congress is truly serious about turning the economy around, reducing the trade deficit, making progress on climate change, and creating a more energy-secure America, it must extend the renewable energy tax incentives, preferably this month. No other action will accomplish so much, or cost so little.

Michael Vickerman
Executive Director
RENEW Wisconsin
222 S. Hamilton St.
Madison, WI 53703
www.renewwisconsin.org

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