BETC changes worry solar, benefit biomass

Oregon’s Business Energy Tax Credit program for energy conservation and renewable energy generation projects, which has become costly and a target for criticism, is scheduled to sunset in 2012. Conversations are taking place in Salem about possibly extending the program; however, some professionals in the renewable energy sector are concerned about some of the changes on the table.

Draft amendments to bills that would extend BETC would base the credit amount on a project’s amount of energy production instead of project cost, and that change would benefit some technologies more than others.

Splitting the BETC

Proposed legislation that would extend Oregon’s Business Energy Tax Credit would officially differentiate the three portions of the tax credit program so that each credit could be considered separately, said Rep. Tobias Read, D-Beaverton. The BETC has drawn the nickname “Betsy”; its offshoots would be named “Manny,” “Connie” and “Gennie.”

Manny, the manufacturing tax credit, is not scheduled to sunset until 2014, and therefore would not be considered for extension this session. Minor alterations to Manny proposed in HB 2414 and HB 2523 call for shifting the administering agency from the Department of Energy to Business Oregon. These changes would simply formalize practices already in place, Read said.

Connie, the energy conservation tax credit, and Gennie, the energy generation tax credit, are scheduled to sunset in 2012. Under some proposed amendments to House Bill 2208, use of Gennie could be limited to projects costing $20 million or less, which would mean an end to incentives for utility-scale projects, according to John Audley, deputy director of the Renewable Northwest Project.

Biomass and hydropower, for instance, can produce more energy per dollar than solar can, said Glenn Montgomery, executive director of the Oregon Solar Energy Industries Association. Efficiency would be rewarded, but that doesn’t tell the whole story, he said.

“I think Oregonians want to see us taking advantage of all of the different technologies available,” Montgomery said.

Ray Wilkinson, president of the Oregon Forest Industries Council, agreed that the biomass industry would benefit from a production-based credit.

“The wind doesn’t always blow and the sun doesn’t always shine,” he said. “Biomass can outcompete.”

If the goal of the program is to produce “the most bang for the buck,” calculating credit amounts this way makes sense, said Roby Roberts of Horizon Wind Energy.

“It seems like it is good public policy to put your dollars where you get the most megawatts of green in the most efficient way,” Roberts said.

Other amendments being proposed to bills would make part of the BETC program competitive. Only the best projects would be given credits, said Rep. Tobias Read, D-Beaverton. This idea troubles some people in the renewable energy industry.

“I’m completely opposed to a competitive process,” said Robert Grott, executive director of the Northwest Environmental Business Council. He said a competitive process would create uncertainty for businesses, which would need to make significant up-front investments without knowing whether they would get tax credits. This investment could be wasted if the credit were needed and not received; and if the credit wasn’t necessary for the project to pan out, then the purpose becomes questionable, Grott said.

“If what you’re trying to do is provide an incentive that gets us (more projects) we wouldn’t have had otherwise, then you could make an argument that it’s the more expensive technologies that we ought to be providing those incentives, within reason of course,” Montgomery said.

Read, meanwhile, said that giving credits to projects that would have happened anyway was the equivalent of “wasted dollars.”

Rather than having a competitive credit awarding process, Grott said, he would prefer that the state set high thresholds for metrics such as project efficiency and job creation. Projects that met those metrics would be accepted for the credit program, he said.

The existing BETC program awards a portion of credits on a competitive basis, and Montgomery said solar has come up short.

“In the last round the winners were small hydro and biomass,” Montgomery said. “My understanding was that it was in large part because they were able to produce more permanent jobs and they were the most cost-effective in terms of energy produced for dollars requested. There’s the scenario where the chips may fall in one or two baskets at the expense of everyone else losing.”

The permanent jobs metric, in particular, bothers Montgomery.

“There are a lot of people in the construction industry who would take offense at the idea that their jobs are somehow not permanent just because they’ve got a definitive start and end,” he said. “You have people who are installing photovoltaics and they’re going from job to job to job: That’s not temporary; that just means they’re going from project to project to project.”

If the BETC program were extended, it would likely be scaled down. But even that would be something, proponents say.

“Everybody’s hoping that some vestige of BETC will continue,” Wilkinson said.

“We were hoping it would advance to this point, where the conversation is about how we (extend BETC) rather than if we do it,” Grott said.

BY: Angela Webber
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