Policy uncertainty has been the biggest roadblock to clean energy in the recent past, but Congressional action taken recently could address many of the tax extenders that expired earlier this year. The tax extenders bill considers extending expiring and expired tax measures. The renewable energy Production Tax Credit (PTC) and Investment Tax Credit (ITC) were included with bipartisan support to a modified “Chairman’s mark” after an earlier draft left them and several other provisions for further negotiation.
Uncertainly over the extension of the Production Tax Credit (PTC) at the end of 2012 resulted in decreased investment and deployment for several sectors in 2013. Solar, however, was not one of them, due in large part to a stable investment tax credit (ITC). The tax credit helped lead to a 50 percent increase in cumulative solar installations, according to the Business Council for Sustainable Energy (BCSE).
“The Business Council for Sustainable Energy is pleased that a number of clean energy tax measures were included in the tax extenders bill that was reported by the Senate Finance Committee… and, importantly, that these extensions run through the end of 2015,” said BCSE President Lisa Jacobson. “Our national energy policy has been driven in large part by federal tax policy, which has been as effective as any state or federal energy policy mechanism in helping to ensure an adequate, reliable, safe, clean supply of energy resources.”
The Senate Finance Committee’s package of tax extenders includes a two-year extension of an ITC for distributed wind, as well as a PTC for utility-scale wind power.
“This provides a critical signal for our industry — which has created up to 85,000 jobs and has a bright future ahead — as we grow from four percent of the U.S. power grid to an expected 20 percent and beyond, so long as we have a predictable business climate,” said Tom Kiernan, CEO of the American Wind Energy Association. “Passage by the full Congress will preserve an essential incentive for private investment that has averaged $15 billion a year into new U.S. wind farms, and create more orders for over 550 American factories in the supply chain.”
Extension on the terms in the Senate Finance Committee markup would allow projects to qualify if they begin construction by the end of 2015, instead of the end of 2013, supporting the wind energy industry as well as the other renewable power sectors that qualify for the tax credits.
“A renewed ITC will provide business certainty to the community and distributed wind segments of the wind industry that are generally unable to utilize the PTC, and enable them to continue to drive economic development across farms, schools, business, and communities across the country — often a multiplier of economic impact to the local community,” said Jennifer Jenkins, executive director of the Distributed Wind Energy Association (DWEA).
Distributed wind projects exist in all 50 states — installed commonly at residential, agricultural, commercial, industrial, and community sites — ranging from a few hundred watts to several kilowatts to multi megawatts. The tax credits now advance toward extension, along with more than 50 other expired provisions of the tax code, in the absence of a comprehensive tax reform deal in Congress.