Legislation has been introduced in Congress to extend the
deadline for companies such as Solargen Energy to meet requirements
in obtaining hundreds of millions of dollars in capital start-up
subsidies, while a separate bill would mandate that businesses buy
equipment from domestic suppliers.
Legislation has been introduced in Congress to extend the deadline for companies such as Solargen Energy to meet requirements in obtaining hundreds of millions of dollars in capital start-up subsidies, while a separate bill would mandate that businesses buy equipment from domestic suppliers.
Solargen Energy is proposing to build a 420-megawatt power facility in southern San Benito County with an estimated project cost of $1.2 billion. Solargen and a multitude of other companies are working against the deadline to receive the funds – they first must gain local government approval – set for the end of December.
Leading up to that prospect, Solargen has been raising funds to obtain the required 5 percent of capital costs in the proposal’s first phase. Solargen’s top shareholder at this point – Taiwan-based UMC Capital Corp. – also had a 46 percent stake in the company that has a deal to produce up to half of the panels for the proposed Panoche Valley solar project, according to recent financials.
Both pieces of legislation potentially could affect Solargen’s proposal. Two separate bills have been introduced specifically to extend the impending deadline of Dec. 31.
One bill is from Sen. Dianne Feinstein, D-Calif., and Jeff Merkley, D-Ore., confirmed Tom Mentzer, chief of staff for Congressman Sam Farr, D-Carmel. It would extend the program for two years while also adding a new tax credit for solar manufacturing plants and development of larger-scale solar projects, according to the Internet blog Green Tech, and confirmed by Farr’s aide, who noted he is unsure whether the bills will move.
A second bill introduced by Rep. Earl Blumenauer, D-Ore., would extend the deadline by two years, while it would add a tax credit for individuals investing in renewable energy, according to Green Tech and Mentzer, who independently confirmed the bills’ authors.
Another bill from New York Democratic Sen. Charles Schumer and three other senators, meanwhile, would suspend the program indefinitely to prevent the grant funds – from the American Recovery and Reinvestment Act of 2009 – from being spent overseas, as could be occurring in Solargen’s case, according to Green Tech. Secondly, as the blog noted, it would allow discretion from the Department of Energy – application approval is mandatory as long as applicants meet certain requirements – in awarding the grants to companies such as Solargen.
The most relevant possibility for San Benito County officials is the prospective deadline extension. Supervisor Anthony Botelho said he has “always felt that it’s wise to extend that deadline so that the right decisions are made” with such complex proposals.
“Certainly, you’re best decisions are always the well-thought-out ones,” Botelho said.
Fellow Supervisor Margie Barrio agreed and said more time is “beneficial to all of us.”
“It’s a huge project, and I really feel it shouldn’t be rushed,” Barrios said.
Both supervisors favored provisions to encourage or require buying of American supplies with federal tax dollars.
“Those American recovery funds should strictly help the American worker,” Botelho said.
Said Barrios: “I think stimulating jobs, labor and materials – it needs to be bought and hired from within.”
Representatives from other federal officials were unavailable immediately due to the Fourth of July holiday.
Solargen Chief Executive Officer Michael Peterson responded in an e-mail regarding the proposed legislation:
“Extending the Section1603 cash grant program would be a benefit to the economy and the renewable energy industry. This program takes an investment tax credit that renewable energy companies would receive over an extended number of years and simply pays it up front in a grant instead of a tax credit over the longer period. Section 1603 has been very successful at stimulating new projects and thus creating new renewable energy jobs. Solargen, and San Benito county, would benefit from the extension of the cash grant program.
“Since Section 1603 has been so successful at creating new jobs and doesn’t require any additional funding – it simply pays out a tax credit that would have been paid over six to seven years – I think it would be very bad for the economy to limit or reduce it at this point. The economy and job growth are limping along and needs these incentives that have been working to continue. Making the Section 1603 cash grant subject to politics and discretionary as opposed to the currently automatic process who would create enough uncertainty that some companies would not take the risk of whether or not it would be funded. In these economic uncertain times, we should not be adding more risk, uncertainty or political delays to programs that have proven to be very beneficial to increasing employment.”
