Solar Energy Bill Provisions Released

After being delayed six times, the proposed Energy Bill, passed a critical milestone at the end of last week as Senator Domenici and Rep. Tauzin announced a compromise agreement between the House and Senate versions of the bill. After much anticipation, the final text of the Energy Bill was released on Saturday and the Solar Energy Industries Association (SEIA), has compiled the following legislation included in the bill that is pertinent to the solar industry.

Washington, D.C. – November 18, 2003 [] Tax – Title XIII – S.1301 The residential tax credit is intact, and would be available Jan. 1 2004 – Dec. 31, 2006 (SWH) and to Dec. 31, 2008 (PV.) The credit is for 15% of project costs for residential and commercial installations of both photovoltaics and solar water heating, with a $2000 cap for each. (ie: if a residential project consists of a $13,333 PV system and a $13,333 SHW system, the total credit could be $4000.) This is the first Federal residential solar credit since the mid-1980s. SEIA succeeded in removing both the language that would have required more than 50% of a home’s water to be heated by the sun, and in changing the certification language based on requests from the solar water heating industry. This credit could be a significant spur for the residential market in both technologies when combined with existing incentives available in the states. – Title XIII – S.1302 The per – kWh production tax credit would be expanded to solar technologies that produce electricity; this is a helpful precedent, but it is ultimately unclear how useful this will be. The credit is available for solar facilities sited before the end of 2006 and provides 1.8 cents kWh for five years’ worth of production. It appears that the credit cannot be used for projects claiming the existing 10 percent investment tax credit. – Title XIII – S.1346-1348 It seems as though both the new PTC and the RTC can now be claimed against the alternative minimum tax. – The 10% Investment Tax Credit for solar will remain permanent; this was in play very late in the game. – Title XIII – S.1366 An extremely complicated provision at the end of the bill appears to create a new pilot bonding authority program, requiring the EPA / DOE to administer a program whereby a handful of state and local governments could issue bonds with preferential tax treatment for the redevelopment of brownfields and qualifying areas. The evaluation criteria or this project specifically includes increasing the 2004 – 2005 growth rate in US PV markets by 75% over the 2001 – 2002 growth rate. The provision may establish another useful precedent and could result in a more comprehensive green bonds initiative at a later date. RPS No Renewables Portfolio Standard, which cuts both ways. Versions afloat late in the game would have developed little or no solar, while impairing our work in the states to establish or maintain RPSs with solar set-asides. An amendment may be offered in the Conference to reinstate the RPS. This, however would be a long shot at this point. Deployment – Title II – S. 205 There is language authorizing $60M / year through 2008 for GSA-funded PV deployment and testing program on Federal buildings, with a stated target of 20,000 systems and 150 MW installed. We will have to work very hard with the GSA, as well as the relevant appropriators and the Administration to implement and secure funding for this initiative, but if successful, this could instantly produce a large new market and an excellent precedent going forward. – Title II – S. 203 Under this bill, the Federal government (the nation’s largest electricity consumer) would operate under its own “mini-RPS,” being required to obtain 7.5% of its electricity from renewable sources by 2011. There would be “double credit” given for generators located at or on Federal facilities/lands or Indian lands. – Title IX – Sec. 922 The DOE is required to create a program to cost-share (pending appropriations) up to 40% for state and local governments that choose to deploy solar and other on-site renewable energy systems. – Title V – Sec. 552 – The Architect of the Capitol is directed to produce a study examining a renewables-powered uninterruptible power system for the Capitol and Congressional office buildings. Net Metering / Interconnection – Title XII, Sec. 1251 – PURPA would be amended to require states to establish net metering rules for all customers within two years. A strong state savings clause completely protects those states such as California and New Jersey which have or are in the process of developing strong standards. – Title XII, Sec. 1252 – States are strongly encouraged (though they may opt out) to establish universally available Time Of Use metering for all customer classes. By recognizing the inherently higher value of electricity generated in the middle of the day, this could substantially increase the value of PV electricity production where implemented in conjunction with net metering. – Title XII, Sec. 1224 – Electrical reliability measures in the bill amend the Federal Power Act to provide FERC with the authority to use distributed generation – explicitly including photovoltaics – as a measure to achieve greater transmission reliability. Aside from the vote of confidence, this subtly provides FERC with greater authority to perhaps eventually issue a truly universal national interconnection ruling. Research and Development – Title IX, Sec. 918 – Overall renewables research spending is authorized to increase annually each year for the next 5 years. – Title IX, Sec. 920 – Explicitly authorizes a 5-year, $210M total program to produce hydrogen from Concentrating Solar Power devices. – Title IX, Sec. 912 – Authorizes the to-be-created Electricity and Reliability office within DOE to create a distributed hybrid research unit focused on integrating renewables and non-intermittent conventional power sources. – Title XII, Sec. 1225 and elsewhere – Increased research and development into devices and methods for protecting the power grid includes solar energy devices. Siting – Language in the bill would ease siting of solar, wind, and other energy sources on Federal lands. Mortgage – Title I, Sec. 143 – FHA and Fannie Mae mortgage coverage for any given situation could be increased by 30% (from the previous 20%) to accommodate residential solar installations. Other Incentives – Title XII, Sec. 1226 – DOE and the Department of Homeland Security would be authorized to give production incentive payments to facilities using renewables as part of an uninterruptible power supply (UPS) system – the incentive would be $.018 / kWh for devices used in power-critical commercial applications, and $.025 / kWh for devices used in security / response facilities. The Secretary would be authorized to spend up to $10M / year from 2004 – 2010 on this program. Overall comments from SEIAý Though the issuance of this Conference Report is a milestone, the bill still is not assured of passage. There have been filibuster threats, and many environmental groups are actively opposing the measure. With that said, it is our expectation that the Energy Bill will become law in the very near future. By any measure the industry has been treated well by the Administration and the key Republican offices writing the Bill. We have also had much help along the way from several offices — Republicans and Democrats. In a later update — when the Bill clears the Congress — we will specifically identify all of those who helped. The increased research and development money, the deployment programs, etc., will now all need to be appropriated in a very difficult budget situation. But, we have the ability to make each and every initiative in the legislation a success! Overall, the solar industry would enter 2004 well-positioned if the legislation becomes law. However, fully realizing, implementing, and funding this raft of new and changed programs will require a great deal of effort and participation on the part of the industry.