Green investment tax credit Renewed by the congress

Renewable energy businesses are breathing a sigh of relief today as the extension of the production and investment tax credits that benefit their industries were approved by Congress as part of the $700 billion bail-out package for the financial industry.

It renewed and broadened a set of tax credits for wind and solar power, geothermal, tidal energy, and more. The move did little to prop up eco-energy stocks, which have followed oil prices down. But the news did send a positive jolt to one of the economy's darkest sectors: homebuilding. Or, more specifically, solar-powered homes. Consumers recognize that green homes "save money month in, month out," says Rick Andreen, president of Shea Homes Active Lifestyles Communities in Scottsdale, Ariz.

Aspiring buyers of green homes will benefit. The solar investment tax credit provisions will extend for eight years the 30 percent tax credit for both residential and commercial solar installations. A buyer who installs a typical $25,000 solar panel system on his roof will get $7,500 in income tax credits, up from $2,000 under the old standard. How long that investment takes to pay off will depend on local rules and utility rates. In markets with the most costly power, such as California, Connecticut, and New Jersey, the pretax compound rate of return on a typical home solar system will be better than 15% per year, says Andy Black, chief executive of OnGrid Solar, an industry research firm.

The fresh credits may mark a turning point for solar-powered homes. During the housing boom, when mortgages and energy were both cheap, green power was not a hot option; typical home buyers preferred granite countertops to solar panels. But even before the subprime crash, builders began to see rising interest in sun-powered dwellings. Ryness Co., which compiles sales data for homebuilders, found in a recent survey that homes with solar systems were outselling others by as much as 2:1 in 13 California communities.

From ens-newswire.com, businessweek.com