Tax break for Nevada energy

Benjamin Grove

Wednesday, Feb. 1, 2006 | 8:36 a.m.

WASHINGTON -- President Bush on Tuesday offered tidbits of good news for renewable energy advocates, but he left unanswered the central question for those who want Nevada to become a hotbed of solar, wind and geothermal power.

As in past years, Bush's State of the Union address included a call for less dependence on foreign oil. "The best way to break this addiction is through technology," Bush said.

The president announced the creation of a new program, the Advanced Energy Initiative, as well as a 22 percent increase in clean-energy research at the Energy Department. Bush urged the nation to continue development of hydrogen fuel cells for cars, and he promised more federal research into alternative fuels, such as ethanol made from weeds or wood chips.

And Bush is expected to ask Congress for $44 million a $5 million increase for wind energy research as part of the 2007 fiscal year budget proposal he will send Congress next week.

Bush also is expected to ask Congress to increase spending for solar power research and development by $65 million to $148 million, primarily to accelerate development of solar photovoltaic cells that can be used in building "zero energy" homes.

"We're thrilled," said Rhone Resch, Solar Energy Industries Association president. He said it was the first State of the Union address in 25 years to urge development of solar power. "This reverses a trend of decreases in (research and development). It shows that solar plays an important role in our energy mix."

But Bush did not answer a question vital to the renewable energy industry: Will the White House push Congress to renew a production tax credit for new alternative energy plants? Congress extended the tax credits last year through Jan. 1, 2008. But many projects are stalled because investors are not certain that the plants can be completed and operating before that date. Those include about a dozen, mostly geothermal or wind powered, in Nevada, said Rebecca Wagner, Gov. Kenny Guinn's energy adviser.

"That can make or break a project just that uncertainty," Wagner said. "It's frustrating because it feels like Nevada is on the cusp of an explosion of resources, particularly wind and geothermal."

The credits are vital because renewable projects cost more to develop than natural gas plants as much as three to four times more for geothermal, said Karl Gawell, Geothermal Energy Association executive director.

"The big question everyone has is: What is the long-term policy?" Gawell said.

Developers are pursuing projects on 11 of 63 potential Nevada sites for geothermal plants, which mine heat from deep underground to produce electricity. Nevada's 14 existing geothermal plants produce roughly 240 megawatts, which amounts to 9 percent of North-ern Nevada's electricity, accord-ing to the Energy Department.

Nevada is considered an ideal state for solar, wind and geothermal power development. Law-makers have said the projects could bring much-needed jobs to rural areas. Senate Minority Leader Harry Reid, D-Nev., has called Nevada "the Saudi Arabia of geothermal energy." But the state is not on target to meet a goal the Nevada Leg-islature set last year: 20 percent of energy produced by renew-able sources by 2015. Solar and wind projects have been stalled by financial and technical problems. Some analysts have said the electric utility's low bond rating made developers wary.

Sen. John Ensign, R-Nev., said he was open to extending renewable production tax cred-its. "I think we're going to take a look at all the options. Everything is on the table."

Reps Jim Gibbons and Jon Porter, both R-Nev., said they supported extending the tax credit. "Nevada is the flagship for renewable energy in the country, if not the world," Porter said.

Gibbons suggested a five-year extension.

"That's the way we get companies to invest in this technology and make it competitive with others sources of energy," Gibbons said. Rep. Shelley Berkley, D-Nev., said she favored extending the tax credit and finding other ways to spur renewable development. But she chided Bush for pursuing renewable initiatives now, after Congress last year approved an energy bill that was full of tax breaks for oil, gas and nuclear companies.

Benjamin Grove can be reached at (202) 662-7436 or at grove@lasvegassun.com.