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Tax policies could add jobs, MWs of new solar-SEIA

* Industry group wants grant program, tax credits extended

* Says policies would create 200,000 new jobs

* Changes could result in 10 GW of new solar installations

By Dana Ford

Tax credits and a two-year extension to a federal grant program for U.S. solar projects would add roughly 200,000 jobs and almost 10,000 megawatts of new solar installations, an industry group said on Wednesday.

Citing research done by EuPD Research, a private research group, the Solar Energy Industries Association (SEIA) urged the U.S. government to extend a grant program, set to expire this year, through 2012.

The program, established in 2009 under the U.S. Recovery Act, was meant to help fill the financing void left by shrinking tax equity markets.

Historically, banks have used tax equity markets to fund solar projects by buying government tax credits from the project owners. Those owners use that money from the banks to cover the costs of development.

But as the credit crisis hit the financial markets, banks’ appetite for those tax credits disappeared.

“The market dynamics have not substantially changed from when the Recovery Act was put in place until today, and that says the need to continue these programs is critical,” Rhone Resch, president and chief executive at SEIA, told Reuters.

SEIA is also calling on the government to allow solar manufacturing costs to be claimed as an investment tax credit.

Combining a possible grant extension with the ability to apply for tax credits would create some 200,000 jobs and lead to nearly 10,000 MW of new installations in the United States by 2016, the group said.

According to SEIA, one megawatt is enough to power some 250 average U.S. homes.

Installed solar capacity in the United States jumped 37 percent last year as state and federal incentive programs helped to prop up demand during a downturn.

It was the fourth straight year of growth, but without changes to current policy, Resch said the U.S. solar industry could grind to a halt.

Several of the big solar players, including industry heavyweight First Solar Inc (FSLR.O), have plans to develop large-scale projects under the grant program, and have been working to meet the year-end 2010 deadline.

Many projects are at risk of missing the cutoff because of permitting and other scheduling delays.

“Our policies are on again, off again. What we need is some stability,” said Resch. (Reporting by Dana Ford, editing by Gerald E. McCormick)