House may derail Tax Credit extension

The US House of Representatives has approved legislation to extend billions of dollars in tax credits for renewable energy but the bill faces an uncertain future with opposition in the Senate.

The US House of Representatives passed a different version of tax incentives in comparison with the Senate. Both the House and Senate bills would extend for one year production tax credits for wind energy, with an eight-year extension for investment tax credits for solar energy projects. Unlike the Senate bill, the House bill does not provide tax incentives for refineries to process oil from shale and tar sands or for projects that turn coal into liquid fuel.

Now, Congress is being urged to pass investment-tax incentives that would help offset the cost of renewable-energy projects. Congress has tried several times and failed to extend an incentive package. Republicans and Democrats haven't been able to agree on how to pay for them.

According to Reuters, the House measure, passed by a margin of 226-166, is similar to the bill that cleared the Senate recently, except that the House bill includes measures to pay for the tax breaks, which are opposed by most Republicans. The report highlighted that it is unclear whether the House and Senate will be able to work out the differences in their bills in time to deliver a final energy tax package to the White House before lawmakers leave town to campaign for the November election.

Recently, the US Senate approved a package to extend $18 billion in tax credits for using renewable energy sources. As per the information available, the consent extends for eight years the investment credit for solar energy and the credit for homeowners buying solar heating equipment, at a cost of $3.2 billion.

"With major instability in our financial markets, solar energy is a guaranteed way to provide the stability we need in our economy right now," Rhone Resch, president of the Solar Energy Industries Association, said in a statement.

Analysts agreed that a US tax credit extension removes a key concern for solar investors. But looking ahead, the industry still faces high raw material costs, declining prices for solar panels, a pullback in government subsidies in big markets such as Spain and Germany and global economic turmoil -- all of which could continue to weigh on solar stocks.