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While the majority of the regulations related to solar power installations are at local and state levels, there
are federal actions that impact solar power generation and development. For example, the U.S. Treasury,
the Environmental Protection Agency and the Department of Energy administer programs that provide
grants, financial assistance and, in some cases, guidelines for the development and installation of solar
power systems. As a result, these programs can influence future regulatory developments at the state and
local level.
For example, the Federal Energy Policy Act of 2005 provides tax credits for residential energy property,
including solar-electric systems, solar water heating systems and fuel cells. Under this law, a taxpayer
may claim a credit of 30 % up to a maximum credit of US$2,000 or US$500 for each 0.5 kilo-watt of
capacity, which include labour costs for onsite preparation, assembly or original system installation, and
for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the
excess amount may be carried forward to the succeeding taxable year. In addition, several states, includ-
ing California and Colorado, have issued incentive programs to promote Renewable Energy Solutions.
Furthermore the U.S. Department of Energy has issued a Solar Energy Technologies Program (“SETP”
or Solar Program) which is aggressively funding a diverse set of photovoltaic technologies that have po-
tential application in a range of markets. SETP works to develop cost-competitive solar energy systems
for the United States. More than US$170 million is spent each year in research and development on two
solar electric technologies with the greatest potential to reach cost competitiveness by 2015: photovoltaic
(PV) and concentrating solar power (CSP).
China
The focus of AEG PS Group's solar solution business in Asia is the Chinese market. The legal framework
for the Renewable Energy Solutions sector is laid down in the Chinese Renewable Energy Law (“RE
Law”) from 2005 which came into effect on 1 January, 2006. The RE Law aims to further promote the
growth of renewable energy in China, to encourage the development of power grids and to support the
power grid industry in purchasing renewable energy despite its higher generation costs. The RE Law it-
self is a framework law, which provides the provincial governments with a mandate to develop renewable
energy feed-in tariffs and quotas for the purchase of renewable energy. The energy policies which have
been stated in the RE Law have subsequently been implemented by way of a large number of ministerial-
level regulations and provincial implementing rules. An essential rule in the RE Law is the so called
“mandatory purchase and connection clause”, which requires state-owned grid enterprises to purchase all
power produced by renewable energy sources and also provide grid connection services for the generation
of power with renewable energy. If power grid enterprises fail to purchase renewable power in full, the
national power supervisory institutions will order them to make respective corrections within a stipulated
period of time.
Under the institutional framework of China, the central government is responsible for the formulation of
the national regulations which guide the provinces with regard to the implementation process of the RE
Law. The central government gives instructions regarding pricing, cost-sharing, taxation and the project
approvals process. However, since there are great disparities between various provinces in terms of re-
source availability, industrial capacity and demand, in some cases provincial governments have needed to
formulate their own detailed provisions for their area within the central government's general policy
framework. These detailed provisions may include such issues as provincial management provisions for
particular renewable energy technologies, financial support for pilot projects and preferential treatment in
other areas such as land access. The Renewable Energy Law requires the relevant central authority to be
responsible for drafting these regulations.
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