Energy groups continue to assess the industry disruption caused by the coronavirus, with the American Wind Energy Association (AWEA) on March 19 saying the global pandemic is putting $43 billion of wind industry investments and payments at risk.
Utilities, grid operators, and other have been altering their routines as state and local governments call for the closures of many non-essential businesses. Energy companies have instituted travel bans, have shuttered their offices—asking many employees to work remotely—and changed how they will interact with customers.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, earlier this week said the virus has caused “a pretty significant crisis” for the solar industry, disrupting supply chains and likely creating labor shortages. Tom Kiernan, CEO of AWEA, on Thursday acknowledged the challenges the coronavirus is causing for the wind energy industry, going so far as to ask for Congress to intervene to protect jobs and economic investment in the sector.
“We’re assessing the many hurdles our members are facing in mitigating the disruptions from COVID-19. Protecting American jobs and economic investment and ensuring the safety of the wind workforce remain our primary objectives,” said Kiernan in a statement. “The COVID-19 pandemic is harming the wind industry’s ability to build the wind farms envisioned by Congressional legislation and putting at risk 35,000 wind energy jobs. To best protect these jobs and the health of our existing workforce, we are asking Congress to immediately extend the schedule and improve the liquidity of our existing tax credits.”
Leaders of the House Sustainable Energy and Environment Coalition on Thursday said they will push for tax credits for renewable energy in any stimulus legislation. Democratic Reps. Gerry Connolly of Virginia, Doris Matsui of California, and Paul Tonko of New York, co-chairs of the committee, in a statement said, “Our members pushed for these credits in the end-of-year funding package and will continue to fight for them in this round of economic stimulus.”
There is opposition to including tax credits for renewable energy in a stimulus package designed to slow the economic damage from the coronavirus. Thomas Pyle, president of the American Energy Alliance, a group aligned with the fossil fuels industry, in a statement Wednesday said, “Some Democrats in Congress are showing their true colors today. Determined to never let a good crisis go to waste, they are seizing the coronavirus pandemic as an opportunity to slip failed green policies into legislation designed to protect the American economy and stop the spread of this deadly virus.”
AWEA on Thursday noted that wind is the largest source of renewable energy in the U.S. and is responsible for “over 114,000 jobs in the U.S. economy.” The group in its initial estimate of the virus’ impact on the sector said it “could put over 35,000 jobs at risk and jeopardize $43 billion in investments and payments to rural communities.”
25 GW of Projects Potentially Impacted
AWEA said its analysis shows an estimated 25 GW of wind projects are at risk due to COVID-19, representing $35 billion in investment. It said the risk also extends to “the potential loss of over $8 billion to rural communities in the form of state and local tax payments and land-lease payments to private landowners, as well as the loss of over 35,000 jobs, including wind turbine technicians, construction workers, and factory workers. The economic losses will have an outsized impact on rural America, where 99 percent of wind projects are located.”
AWEA in its appeal to Congress said that developers of wind energy projects have been moving forward “based on what appeared the safe assumption that their projects would qualify for the federal production or investment tax credits, which reduce costs to electricity consumers.” With those tax credits expiring, delays in completing those projects could push them past deadlines to qualify for the credits.
“There is a record amount of wind projects under development. Delays caused by COVID-19 will make it difficult for some U.S. wind projects to come online in time to meet financial and economic obligations, putting projects at risk of cancellation,” said AWEA Vice President of Research and Analytics John Hensley. “Decisive government action in the short term can do much to soften the virus’ effects and protect the over 100,000 workers that count on the U.S. wind industry for their livelihood and the consumers that count on wind power for safe, low-cost, zero-carbon electricity.”
Call to Extend Tax Credits
According to the U.S. Energy Information Administration, under the current production tax credit (PTC) legislation, wind projects are eligible to receive credit based on either the year the project begins operation, or the year in which they demonstrate that 5% of total capital cost for the project has been spent and project construction has begun. This “5% down” method, known as safe harboring, enables wind developers to receive the PTC at a given year’s level, but they must complete the project’s construction no more than four calendar years after the calendar year in which construction of the project began.
As an example, developers of U.S. wind projects who want to receive the full 2016 value of the PTC must bring their projects online by the end of this year. AWEA on Thursday said that based on the latest project statuses reported on the Preliminary Monthly Electric Generator Inventory, an EIA-compiled database, many of this year’s new wind projects are expected to come online in December—5.7 GW of generation capacity, or 44.7% of the 2020 total.
AWEA wants lawmakers to “eliminate the uncertainty created by expected delays [from COVID-19] and allow investment and hiring to move forward by providing two additional years of safe harbor for projects commencing construction after December 31, 2015, letting them receive the tax credits as originally envisioned.” Current legislation in Congress addressing economic concerns created by the pandemic could include money for what POLITICO called “distressed sectors of the economy.”
“We absolutely hope to see clean energy tax credits included in a larger stimulus package,” said Reps. Matsui, Tonko, and Connolly. “Including these credits will help us address both the economic slowdown we are facing as a result of COVID-19 and the ongoing climate crisis.”
—Darrell Proctor is associate editor for POWER (@DarrellProctor1, @POWERmagazine).