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By Andrew Restuccia, The Hill EWire

A one-year extension of a federal grant program will provide a major boost to the solar industry and result in more than 37,000 new jobs, a new report says.

The report, commissioned by the Solar Energy Industries Association (SEIA), comes at a politically sensitive time for the solar industry. Republicans in Congress have raised concerns about the industry, citing the September bankruptcy of Solyndra, a California solar-panel manufacturer that received a $535 million federal loan guarantee in 2009.

But SEIA argued Wednesday that the industry can be a boon to the economy if the federal government extends the Section 1603 Treasury Program, which gives solar developers the option to receive an up-front grant instead of a tax credit. The program, which was established in 2009, is set to expire at the end of the year.

“At a time when President Obama and Congress are looking for solutions for America’s jobs crisis, it would be unconscionable to allow this proven job-creating program to expire,” SEIA President Rhone Resch said in a statement.

“Killing the 1603 Program amounts to a tax increase on the thousands of small businesses that are creating jobs in solar. The bottom line is that our capital markets are still in trouble and this program is needed today as much as it was when it was created.”

Resch pointed to a report by EuPD Research commissioned by SEIA that says a one-year extension of the grant program would result in 37,394 additional solar-industry jobs in 2012 as well as enough new solar installations to power 400,000 homes.

“The U.S. solar market has experienced rapid growth in the last few years and is poised to continue growing over the next five years according to our baseline forecast,” the report says. “However, extending the TGP would significantly accelerate this growth, increasing investment, employment and deployment across the U.S.”

The U.S. solar industry faces major challenges, including plummeting solar-panel prices, uncertainty surrounding government incentives and major competition from countries like China, which have invested billions in the industry.

But SEIA has pointed to a series of positive developments for the industry. The group released a report last month that said solar panel installations increased by nearly 70 percent in the second quarter of 2011 when compared to the same period last year.

House Republicans have bashed the Obama administration for its handing of the Solyndra loan guarantee, launching an investigation into the issue. The growing firestorm over Solyndra has led many Republicans to question whether the United States should be investing in solar manufacturing.

Rep. Cliff Stearns (R-Fla.), who is heading up the House Energy and Commerce Committee’s investigation, said in a recent interview that the United States “can’t compete with China to make solar panels and wind turbines.”

But the Obama administration has called for continued investment in the solar industry, arguing that it is necessary to compete with countries like China.

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