Reduced government support will hinder renewable project growth: panelists

Washington (Platts)--18Jan2012/307 pm EST/2007 GMT

The expiration of tax credits for renewable energy projects in the US and fiscal pressure on state and federal governments should translate into a difficult environment to finance and build renewable energy facilities, a panel of speakers agreed during a webcast Wednesday.

While alternative financing vehicles such as master limited partnerships or real estate investment trusts are available and being examined by a few companies, reduced tax benefits for developers will mean trying times for those looking to build renewable energy projects, Peter Liu, managing director of Clean Energy Advantage, a renewable energy investment firm, said.

The Treasury Department's 1603 program that provided a 30% cash grant to project developers in place of tax credits expired at the end of 2011, and the production tax credit for renewable facilities expires in 2012.

In essence, however, projects have to be under construction in the first quarter of 2012 to qualify for the PTC, and if neither the 1603 program or PTC effort is extended or revived by Congress, the US could see a 50% drop in projects being developed, Todd Foley, senior vice president of policy and government relations at the American Council on Renewable Energy, said.

With the expiration of tax credits in the US and relatively low-cost natural gas making gas-fired generation more economical for generation developers, "it has been difficult to sustain interest in the global investment community" for renewable energy projects, said Ken Locklin, managing director of London-based Impax Asset Management Group.

With reduced government support for renewable energy resources, there will be fewer projects built compared with the gains made in the last few years, added Sarah Fitts, an attorney with Debevoise & Plimpton. "There will be some projects built, but there will be fewer of them," she said during the webcast hosted by ACORE.

--Tom Tiernan, tom_tiernan@platts.com

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