Energy options pick up steam

After the push to reauthorize renewable energy tax credits died as time ran out in the 2006 Utah legislative session, industry representatives and concerned legislators got a head start on 2007.

The failure to renew the credit, which was set to expire on Dec. 31, 2006, created an unsure future for renewable energy industries in Utah, which are often made or broken by the availability of tax credits.

But state Sen. Howard Stephenson, R-Draper, who sponsored the 2007 bill to reinstitute the credit, has come to see 2006's failure as a blessing in disguise.

"My original intention was to restore the previous credit," Stephenson said. "But it became obvious to me that we were giving the credit not for energy generation but for putting the equipment in place. We were rewarding the wrong thing."

The bill Stephenson proposed a few weeks before the 2007 session began was patterned on the federal tax credit, which rewards commercial renewable energy producers for the energy they actually produce. Stephenson's bill was bandied about in the two chambers for a while and ultimately incorporated into the "omnibus" tax bill created in the Senate and passed by a wide margin by both chambers.

The new credit offers commercial producers a credit of 0.35 cents per kilowatt-hour produced over the first four years of a project's life. This is in addition to the 1.9 cents per kwh federal tax credit. Fiscal projections prepared with the bill estimate it will hand out about $4.3 million in tax cuts over the next two years, the majority of that coming in fiscal 2009 as an anticipated boom in renewable energy systems kicks in.

Previously, large-scale projects were only eligible for a one-time state credit based on construction and installation costs. Other tax credits for residential and small commercial projects, however, will remain one-time benefits as before.

The goal, Stephenson said, is to encourage the United States to work toward energy independence. And he said states must take such matters into their own hands.

"If (energy independence) could be our goal as a nation, think how differently we would be behaving in the world," Stephenson said. "I call this a peace initiative."

Winds of change

The industry that stands to gain the most from the redesigned corporate credit is wind power. Utah's wind energy market, which until now has been virtually nonexistent, is poised for a boom with at least three major projects nearing the construction phase and other areas of the state investigating the possibilities.