Spending Bill Extends Wind, Solar Tax Credits—Provides Money for Coal, Gas, Nuclear, and Power Grid

In a major boost to the wind and solar industries, Congressional leaders agreed on a multiyear extension of renewable energy tax credits, which could provide several years of predictable policies, encouraging investment in new projects.

The tax credits are part of a 2,009-page omnibus-spending bill unveiled by the House Appropriations Committee on Dec. 15. The bill also provides $11 billion for programs within the Department of Energy—a $794 million increase from fiscal year 2015—of which $632 million is slated for research to advance coal, natural gas, oil, and other fossil fuels. Research for the next generation of nuclear technology would be funded with $986 million, while $206 million would go towards programs to strengthen the nation’s electric grid.

“The road to this final bill has not been easy, but it has been an open process that followed ’regular order’ to the maximum extent possible,” said House Appropriations Committee Chairman Hal Rogers (R-Ky.).

Rogers noted that during the past year, his committee held over 100 hearings, and that the full House debated under open rules on the floor for more than 78 hours and considered 456 amendments.

Diminishing Credits

In the end, the agreement provides for the production tax credit (PTC) and alternate investment tax credit (ITC) for wind energy to be extended at previous levels through 2016. According to the American Wind Energy Association (AWEA), the credit is currently worth 2.3 cents per kWh. The wind PTC would be phased out by reducing the credit value to 80% of the present value in 2017, 60% in 2018, and 40% in 2019. After 2019, the wind tax credits would expire.

The 30% temporary solar ITC would be extended from its current expiration after Dec. 31, 2016, for three additional years through 2019. The solar ITC would then be phased out by providing a 26% credit in 2020 and a 22% credit in 2021. It would expire after 2021. The agreement extends the temporary credit for solar residential energy-efficiency property in the same fashion.

“While an end-of-the-year Omnibus is not the preferred way to do business—it is always better to complete individual bills in a timely fashion—this bill will allow Congress to fulfill its constitutional duty to responsibly fund the federal government and avoid a shutdown,” Rogers said.

Industry Groups Applaud the Action

“This agreement will enable wind energy to create more affordable, reliable and clean energy for America by providing multi-year predictability as we have called for,” said Tom Kiernan, CEO of the AWEA.

The performance-based PTC has helped quadruple wind power capacity in the U.S. since 2008, with more than 69,470 MW of wind power currently in operation.

Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), agreed that the tax credit extensions would be good for the industry.

“By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America,” Resch said.

According to SEIA, there are currently about 200,000 workers employed by the U.S. solar industry and it feels the extension could result in 140,000 additional jobs. Resch said he expects the nation’s solar power capacity to triple by 2022 to 95 GW.

“This is the latest good news in a monumental week for clean energy. Between the strong Paris agreement, the announcement that another major city—San Diego—is committing to going 100-percent renewable, and now Congress agreeing on a long-term extension of tax incentives, you’re seeing the clean energy revolution continue to build momentum,” said Bob Keefe, executive director of the national nonpartisan business group Environmental Entrepreneurs.

A vote on the bill is expected on Dec. 18.

“If this passes, our industry will get a break from the repeated boom-bust cycles that we’ve had to weather for two decades of uncertain tax policies,” Kiernan said.

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)