An extension of the production and investment tax credits for solar energy were approved by Congress as part of the $700 billion bail-out package for the financial industry.

The House of Representatives passed Emergency Economic Stabilization Act of 2008 by a vote of 263 to 171, and less than two hours later, President George W. Bush signed it into law. The Senate passed it on Wednesday.

The tax credit package will extend the renewable energy production tax credit for one year and the investment tax credit for eight years. The extensions will be partly paid for by a change in the tax code for the oil and gas industry.

The one year production tax credit extension also applies to other energy sources such as geothermal; closed-loop biomass; hydropower; landfill gas; and trash combustion facilities.

It also creates a tax credit for a new energy production category – marine renewable – which is energy derived from waves, tides, and currents.

The bill creates a new limitation on the amount of credits that can be claimed with respect to property placed in service after 2009.

The measure increases the tax credit limitation for fuel cells from $500 to $1,500 per half kilowatt of capacity.

The bill provides tax credits for advanced coal electricity projects with highest priority given to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions at a cost of $1.4 billion over 10 years.

The $2,000 monetary cap for residential solar electric installations is eliminated and so is the prohibition on utilities from benefiting from the credit.

It also authorizes $800 million for clean energy bonds for renewable energy generating facilities, including solar.