Wall St. mess stands in way of wind, solar energy projects

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SAN FRANCISCO -- The Wall Street meltdown may have claimed another category of victims -- the developers of wind farms, solar energy installations and other green-tech firms.Developers of big wind farms and solar installations rely on federal tax credits to help finance their projects, and those credits are set to expire at the end of this year. After months of false starts, Congress appeared poised to extend the credits before adjourning this week.Then the financial crisis intervened. Congress tried to reach agreement on the tax credits on Monday as part of a larger package of tax measures but couldn't decide how to pay for them. Now green-tech entrepreneurs fear the issue will be shoved aside as Congress fixates on the proposed $700 billion Wall Street rescue plan.Congress could still act before the end of the week, but observers aren't hopeful. And without the credits, some proposed wind farms and solar power plants may not be built."It would take us in exactly the wrong direction as a country, especially with respect to climate change," said Peter Darbee, chief executive officer of Pacific Gas and Electric Co. The utility has signed contracts with several developers of major solar power plants and has repeatedly warned that some of the projects will fall through without the tax credits. The company is counting on those projects to meet a looming state deadline to increase its use of renewable power."It would be a severe blow to the work I've been doing and the general movement in respect to renewables," Darbee said.Silicon Valley made extending the tax credits one of its top legislative priorities for the year and sent a host of CEOs to Washington to lobby politicians in person. And just last week, it looked as if that lobbying would pay off. Now Congress may wait until 2009 to act."We're constantly getting caught in these political crosscurrents, and it's time to move beyond that," said Gregory Wetstone, senior director of government affairs for the American Wind Energy Association.The tax credits are a key part of how renewable-power developers finance their projects.Solar companies, for example, get a credit for 30 percent of their construction and labor costs. That's a substantial sum, considering that some proposed solar power plants will cost more than $1 billion to build. The tax package that stalled in Congress this week would have extended that credit for eight years.There are 26 large-scale solar power plants being planned throughout the United States, according to the association. Together, those plants would generate 5,390 megawatts, enough electricity to power more than 4 million homes."One of the executives I've talked with said, 'How do I do my annual budget now?' " said Monique Hanis, spokeswoman for the Solar Energy Industries Association.The potential loss of the tax credits also comes at a time when financing for all kinds of companies is drying up, part of the larger financial crisis. Many solar power developers won't need financing for another year, because they still haven't secured government permits for their proposed plants. But when they do need investment, they don't know what kind of landscape they'll face."Investors like stable market conditions where the rules don't change very much, and all of this is not helpful," said Kevin Swartz, president of Solel USA of Irvine, Calif. His company plans to build a large solar plant in the California desert and sell the power to PG&E."This is not very helpful at all," he said.E-mail David R. Baker at dbaker(at)sfchronicle.com.(Distributed by Scripps Howard News Service, www.scrippsnews.com.)