Pro-renewables US lawmakers are redoubling efforts in Congress to build bipartisan support for a five-year renewal of federal tax credits set to expire or begin phasing down for wind and solar PV, while enabling energy storage to also qualify.

Their intentions were detailed in a clean energy tax package – Growing Renewable Energy and Efficiency Now Act (GREEN) of 2019 – released by the House of Representatives Ways and Means Committee, the chief tax writing body in the chamber, on Tuesday.

Among its provisions are extension of the production tax credit (PTC) for wind through 2024 at 60% value, or $14.40/MWh, for electricity sent to the grid by an eligible project during its first decade of operation.

Now at 40% value, the PTC is due to sunset on 31 December after a multi-year phase down. In a rush to qualify projects before expiration, the industry is building capacity at an unprecedented pace that will peak in 2020 at 12-14GW before tapering off through 2023.

There is 100GW of installed wind power capacity nationwide and roughly 40GW more PTC-eligible under construction or in advanced stages of development. The wind industry is deeply divided over a potential PTC extension.

The largest project developers want it to go away in the belief wind energy next decade will be the cheapest source of electric generation as technology continues to drive meaningful cost reductions. Tax equity is also an expensive and inefficient way to finance wind farms.

Their smaller competitors and many supply chain companies want continuation on the argument that it is unfair that every other energy source would retain federal subsidy support except wind. Most local and state officials believe Congress should subsidise all renewables for the climate, economic development and job creation benefits.

The GREEN Act of 2019 would also extend the 30% investment tax credit (ITC) for offshore wind and solar PV through 2024, while energy storage would become eligible.

Offshore wind is also experiencing rapid growth, in part because both developers and states were rushing capacity development plans forward to capture at least some value of the ITC before it goes away on 31 December.

Also, because it represents a potential major new source of clean, cost-competitive energy in California, and populous mid-Atlantic and northeastern coastal states. Supply chain development alone could be a $70bn opportunity next decade.

Unlike the PTC, the ITC is a one-time, up-front credit that works well for offshore wind projects that require larger capital outlays and longer development cycles than their onshore counterparts.

Other than the five-turbine, 30MW Block Island pilot, the only US offshore array that came online in 2016, no other projects in development have been able to benefit from a 30% ITC which has been phasing down in value since then.

The 30% ITC for solar is set to begin stepping down on 1 January next year to a permanent 10% in 2022. Under the bill, it would phase down down to 26% in 2025, 22% in 2026 and then 10% on a permanent basis.

Having energy storage technologies benefit from the 30% ITC - above 20kWh - would promote their development at utility-scale which would help both low-cost wind and solar become more accessible during intermittent periods. ITC value would step down to 26% in 2025 and 22% in 2026 before going away.

Chances for passage into law

The best chance for extension of some of these tax credits and other incentives in the GREEN Act of 2019 covering biofuels, carbon capture and storage, electric vehicles, geothermal and other technologies, doesn’t lie with passage - seen as unlikely - of this bill.

Instead, supporters hope to attach some, hopefully most, of these tax incentives to legislation that Congress will need to pass before 20 December to provide continued funding for the federal government. Otherwise, it will shut down, something lawmakers want to avoid in the run-up to national elections in November 2020.

There have been three government shutdowns – one, three and 34 days – since President Donald Trump took office in January 2017.

To prevent this from occurring again, both political parties – Democrats have a majority in the House and Republicans in the Senate – will negotiate elements of the funding bill. An increasing number of Republicans support clean energy and renewables, improving chances for a deal to include at least some tax breaks and others for unrelated industries.

“When they put that package together for continued funding of the government, they’ll be looking for opportunity to move forward on some of these important tax issues,” Greg Wetstone, chief executive of Washington, DC-based American Council on Renewable Energy, the nation’s leading renewables advocacy group.

It’s no slam dunk but certainly possible.

“That’s the vehicle most likely to carry elements from this bill and other provisions as well all the way into law,” he said in an interview. “It’s no slam dunk but certainly possible.”

Senate Republicans have already put forward their own bill to extend certain tax incentives for renewables and in other sectors.

“I think there is motivation to move forward on both sides of the aisle and on both sides of the capitol,” said Wetstone.

President Donald Trump, who has been critical of wind turbines, could veto elements of an eventual government funding bill although his administration has supported offshore wind development.

He faces a difficult road to re-election and is presently subject to an impeachment inquiry in the House.

Wind

US lawmakers redouble efforts to extend renewables tax credits