Wednesday, February 29, 2012

The Implications of the Expiration of US Renewable Energy Subsidies

US Renewable energy subsidies expired in 2011 and this will slow the growth of renewables. There is already evidence that the expiration of the renewable energy cash grant programme under Section 1603 of the US Internal Revenue Code will reduce the volume of new renewable energy projects.

A significant volume of Q4 2011 transactions were driven by efforts to benefit from Section 1603. As a consequence the impact of renewable energy subsidies will not be immediately felt during the first six to nine months of 2012.

In 2011, although the debt market for renewable energy financing was strong, there was evidence that lenders became even more cautious. In 2012, different capital markets solutions will need to be considered.

To improve the outlook for renewable energy Congress can support President Obama's budget proposals to end oil subsidies and make renewable energy tax credits permanent.

© 2012, Richard Matthews. All rights reserved.

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