Renewable energy is back on the docket for the Senate Finance Committee, and Chairman Orrin Hatch (R-Utah) is likely to release the draft of his bill as early as this week. The Committee is considering a two-year extender for tax incentives for new wind, geothermal, biomass, landfill gas and ocean energy projects during a markup. Also being considered is the extension of second generation biofuel producer tax incentives for production of biodiesel and renewable diesel. The extenders package covers 52 items concerning a wide range of industries in addition to renewable energy, including mortgage lenders, education, and retail and restaurant improvements. The 30% investment tax credit for solar and fuel cell projects is not expected to be on the table. The Solar Energy Industries Association (SEIA) urges the solar community to advocate the investment tax credit, which is set to step-down in 2016 without an extension.
Senator Chuck Grassley (R-Iowa) is lending support to the Production Tax Credit (PTC) extension as its original author in 1992. The modern PTC that expired at the end of 2014 provided a rebate of $0.023/kWh for wind, geothermal, closed-loop biomass projects and $0.011/kWh for other eligible technologies. The PTC generally applies to the first 10 years of a project’s operation. The PTC expired at the end of 2014; however, the Internal Revenue Service provides “safe harbor” to projects that were under construction on the expiration date.
In the past it has proven difficult to finance new projects once the PTC expires. For example, when Congress failed to extend the PTC in 2013, the wind industry experienced a 92% drop in new installations and a $23 billion plummet in private investment according to the American Wind Energy Association. Similar cliffs occurred when the PTC expired in 2000, 2002 and 2004.
One hurdle for the Senate’s tax extenders bill is finding a legislative vehicle to put to vote before the full Congress. Congressman Paul Ryan, Chairman of the House Budget Committee, has suggested combining international tax reforms with a highway trust fund extenders’ bill that has already passed the full chamber. However, members of Chairman Ryan’s party have sought to eliminate the tax credit and have co-sponsored a bill introduced by Rep. Marchant (R) in the House aptly named the “PTC Elimination Act.” Wind energy could prove to be a wedge issue for Republicans since, among the Congressional districts, over 81 percent of all installed wind capacity is in Republican-held districts in the 112th Congress.