Tough times for tax credits

Solar startup SpectraWatt Inc. announced in January that it was scrapping plans for a plant in Hillsboro, Ore.

The company halted its Hillboro plans because of an inability to find financing, and is looking for a building to retrofit instead, either in Oregon or elsewhere, SpectraWatt CEO Andrew Wilson told The Oregonian in January. Fueled by $50 million in investments, SpectraWatt, a spinoff company of Intel, planned to begin shipping solar cells from the 60-megawatt Hillsboro facility in mid-2009.

SpectraWatt's decision left some wondering about the efficacy of the state's Business Energy Tax Credit (BETC) program, which offers credits of up to 50 percent of project costs for renewable energy projects, including solar manufacturing facilities.

The problem right now isn't BETC's clout, says Ron Pernick, a principal for industry research group Clean Edge. Rather, tax credits generally become less appealing in a down market, he says.

"BETC is one of the most aggressive and unique tax credits in the country,” Pernick says. “The issue right now is that very few people have tax credit appetite."
 
The same holds true on a national scale, with the general economic downturn potentially dampening investment spurred by the October 2008 extension of the Investment Tax Credit, according to Monique Hanis of the Solar Energy Industries Association (SEIA).

Despite the hitch in SpecraWatts's Hillsboro plans, Pernick says there are bright spots on the solar production front. SolarWorld's October 2008 opening of its Hillsboro solar plant, a Sanyo (Nasdaq: SANYY) solar manufacturing facility slated for Salem, Ore., and solar ingot and wafer manufacturer Solaicx's Portland plant, "are all success stories of BETC," he says.