A federal cash-grant program covering part of the cost of a new solar energy system purchase us set to expire at the end of 2011. States like Georgia and North Carolina still have solar tax credits in place, but an extension of the federal grant would help drive businesses to look at solar purchases

A federal grant program currently available for businesses that install solar energy systems is set to expire on December 31, 2011. Solar companies are lobbying for a 1-year extension of the grant program, citing rapid industry growth as a result of this grant.

Many state tax credits, like the one in Georgia covering 35% of the cost of a solar energy purchase, are still available, however, to both businesses and homeowners, along with a 30% federal tax credit.

But businesses currently have the option to take the federal tax credit as a cash-grant, improving cash flows of the projects. Many times this is one of the main reasons businesses are able to get financing for large solar energy projects.

Rhone Resch, president and chief executive of the Solar Energy Industries Association, said that the grant program aided "extremely low-risk projects where you're using off-the-shelf technology."

In arguing for the continuation of federal incentives, advocates of renewable energy often point out that all forms of energy — including fossil fuels — rely on a complex web of state and federal credits and incentives. Mr. Resch argues that more established technologies including oil and gas, coal and nuclear power are still taking advantage of incentives that were established in the 20th century.

"In the same way we've invested in oil and gas, it's time to invest in renewables," he said.

The expiration of this solar grant program will be felt all around America, including North Carolina where utilities have ties to larger solar projects. Greg Efthimiou, a spokesman for Duke Energy of Charlotte, N.C., said that although Duke built renewable energy projects to meet customer demands as opposed to the tax credit deadline explicitly, the federal incentives did help — and Duke planned to build five large wind farms next year, including two in Texas and two in Kansas.

Companies have been racing to finalize solar energy contracts before the grant program ends this year.