Senate oks extending energy tax credits

By Tom Doggett

WASHINGTON (Reuters) - The U.S. Senate on Tuesday approved a package to extend $18 billion in tax credits for using renewable energy sources like wind, solar and geothermal and also provide incentives to cut energy consumption.

The move, which alternative energy companies had been lobbying for all year, sent shares of solar power companies higher in after-hours trade. The delay in extending the tax credits had been a major damper on those stocks this year. The Senate was seen as the biggest roadblock after it shot down the extension eight times this year.

"Getting past what has been largely the deal-breaker in the past should be positive," Wedbush Morgan analyst Al Kaschalk said of the impact the vote would have on solar stocks.

Under the proposal, which will be part of a much bigger tax bill, the tax credit for producing electricity from wind would be extended for one year. The credit for other renewable sources, such as wave and ocean tide projects that generate power, would be extended for two years.

The residential and business tax breaks for solar energy would be extended for eight years.

"Solar is the winner here," Raymond James alternative energy analyst Pavel Molchanov said.

Shares of top U.S. solar company SunPower rose 4 percent in extended trade to $91, while First Solar Inc's stock rose 3.6 percent to $218.50. Evergreen Solar Inc shares gained 7 percent to $6.14.

Makers of wind turbines, solar panels and other sources of renewable energy argue that the tax credits are critical to making cleaner power competitive with that produced from greenhouse gas producing coal and fossil fuels.

The industry also says the tax credits will help green companies build manufacturing plants and other facilities that will create jobs.

"With major instability in our financial markets, solar energy is a guaranteed way to provide the stability we need in our economy right now," Rhone Resch, president of the Solar Energy Industries Association, said in a statement.

The House of Representatives must still vote on continuing the renewable energy tax credits, and the White House said earlier on Tuesday it would support the measure.

"Despite concerns with some provisions in this bill, it's a bill the president can sign, and we strongly encourage the House to pass it," White House spokesman Tony Fratto said.

Senate Majority Leader Harry Reid urged the House to "wise up and accept" the package as passed by the Senate.

"If they try to mess with our package, it will come back here, it will die," Reid said.

To cover the costs of the tax breaks, the oil industry would pay higher taxes.