Focus on four areas relating to FY’07 funding and EPACT 2005:

Scott Sklar, President of The Stella Group, Ltd. (Washington, DC)

A) Appropriations (President’s FY’07 Budget request for USDOE EE\RE)

Good news: Increases in Biofuels/BioPower, Hydrogen & Fuel Cells, Photovoltaics and Wind as well as Plug-In Hybrid and Battery RD&D are sound, solid investments. Within these RD&D programs, specific programmatic guidance to insure that standardized modular biofuels and biopower systems, renewable-derived hydrogen and fuel cells for distributed generation, advances in PV system components integration and nanotechnology, and small wind systems RD&D are especially recognized and continued.

Bad news: Closing down the Geothermal, Hydropower and Solar Thermal and Lighting RD&D programs are uncalled for and are bad public policy. Advances in accessing geothermal heat, enhance output and fish-friendliness of existing hydropower turbines, and development of new certification protocols for solar water heating and new materials are all intermediate term benefits for the nation, and as valuable as the RD&D programs increased above. Addition of freeflow hydropower RD&D and kinetic wave buoy technologies are critical adjuncts to the Hydropower RD&D program, and advanced materials and optics for solar water and space heating systems and hybrid lighting are “high yield” investments.

Caution: Look at the smaller programs and the subprograms within budget categories. The International program really is a slush fund for all energy activities and should be closed down. Distributed generation program should be funded at $25 million per year for enabling technologies that benefit ALL distributed generation such as: ‘smart meters and inverters’, smart battery banks, communication protocols between interconnection components and appliances, and new “plug in” circuit breaker boxes with inverter interface.

B) Energy Policy Act of 2005 (Three Highlights)

1) Tax Incentives - Investment Tax Credits (solar, geothermal
                and fuel cells) and Production Tax Credits (biomass,
                wind and potentially other renewables)

Tax incentives for natural gas pipelines (16) years and advanced nuclear power (20 years) and renewable energy (2 years) - not equitable. The renewable credits must have 10 years to be a viable market tool with long-term implications for sustainable market growth.

2) Interconnection Standards and Net Metering

Under EPACT, Title XII which deals with Electricity (Sections 1251, 1254), interconnection expert Chris Cook states, "Rather than mandating federal net-metering standards and interconnection standards, the two sections direct states to undertake consideration and make a determination with respect to each standard. It is impossible to say with certainty if states will have broad or narrow discretion in meeting the requirements of these sections. The essence of Section 1254 is to promote the standardization of interconnection procedures around the IEEE 1547 standard”. Now 39 States have net metering laws based on these two standards (IEEE 1547, UL 1741) and they are all different - from actual component requirements, to whether it's State-wide or utility service territories, and with different size limitations from 2 - 10 - 100 kWs - 2 MWs.. The Federal Energy Regulatory Commission (FERC) has issued a notice to consider expediting interconnection under 2 MWs and some States are following suit. It’s time to “bite the bullet” and standardize interconnection nationally (as we did for telephones) to lower costs and increase reliability.

3) IRS Seeks Applications for $800 Million in Clean Energy Bonds

The U.S. Internal Revenue Service (IRS) requested applications last week for renewable energy projects to be financed with up to $800 million in "tax-credit" bonds. Unlike normal bonds that pay interest, tax-credit bonds pay the bondholders by providing a credit against their federal income tax. In effect, the new tax-credit bonds will provide interest-free financing for certain renewable energy projects. According to the American Public Power Association (APPA), this provides an effective new financing tool for public power companies, which are non-profit and cannot directly benefit from other tax credits. Under the new Clean Renewable Energy Bond (CREB) program, established by the Energy Policy Act of 2005, up to $800 million in tax-credit bonds may be issued by qualified bond lenders, cooperative electric companies, and government bodies (including public power systems). The borrower must be a cooperative electric company or a government body, and must use the financing for wind, biomass, geothermal, or solar energy projects, or for hydropower expansions, trash combustion facilities, or refined coal production facilities. The act allows government bodies to borrow up to $500 million for such projects, setting aside at least $300 million for cooperative electric companies. Since the federal government essentially pays the interest via tax credits, the IRS must allocate such credits in advance, which is why it is seeking applications now; they're due by April 26th, 2006.

Any questions, please e-mail me at solarsklar@aol.com. Thank you.

Scott Sklar
President
The Stella Group, Ltd.
1616 H Street, N.W., 10 th floor
Washington, D.C. 20006
Phone: 202-347-2214 Fax: 347-2215
E-mail: solarsklar@aol.com
Message beeper: 202-347-2214 via
answering service
Web sites: www.thestellagroupltd.com

Read Scott's article on this topic "King Solomon and the Baby or Practical Politics?" at:
http://www.renewableenergyaccess.com/rea/news/story?id=43339

The Stella Group, Ltd. is a strategic marketing and policy firm for clean distributed energy users and companies which include advanced batteries and controls, energy efficiency, fuel cells, heat engines, minigeneration (natural gas), microhydropower, modular biomass, photovoltaics, small wind, and solar thermal (including daylighting, water heating, industrial preheat, building air-conditioning, and electric power generation). The Stella Group, Ltd. blends distributed energy technologies, aggregates financing (including leasing), with a focus on system standardization. Scott Sklar, the Group's founder and president, lives in a solar home in Arlington, Virginia and his coauthored book, A Consumer Guide to Solar Energy, was re-released for its third printing. His Q&A Column appears on the largest clean energy web portal: www.renewableenergyaccess.com