Last-minute stimulus deal in US extends clean energy tax credits

Concerns by Senate Democrats could see the $3.5 trillion budget reconciliation package (and its clean energy investments) cut in half.

Just before the group broke for the Christmas holiday, US Congress struck a last minute bipartisan deal on a major energy bill as part of the omnibus package to fund the federal government. The energy bill includes increased funding for renewable and energy efficiency programs.

The legislation provides a two-year extension of the solar Investment Tax Credit (ITC) and additional funding for research and development, including on soft costs critical to distributed energy deployment and support for more sensible access to federal lands for renewable energy projects.

Under the legislation, the solar ITC will remain at 26% for projects that begin construction in 2021 and 2022, step down to 22% in 2023, and down to 10% in 2024 for commercial projects while the residential credit ends completely. Companies beginning construction on projects in 2021 would still have a four-year period to place their projects in service to take advantage of the ITC, with the statutory deadline for projects placed in service reset to before Jan. 1, 2026.

Wind projects received a one-year extension of the production tax credit/investment tax credit for land-based wind at 60 percent of their full value and a 30 percent offshore wind investment tax credit for projects that commence construction from January 1, 2017 through December 31, 2025

In terms of increasing energy efficiency, the bill reauthorizes an important weatherization program for homes.

In addition, the bill provides loan guarantees for projects that deploy innovative emission-reducing technologies and establishes new programs to accelerate the transition to clean energy to market. While the legislation still includes fossil fuel and nuclear research and development funding, it shifts funding parity towards renewables. It funds the Office of Energy Efficiency and Renewable Energy at $2 billion more over five years than the amount provided to the Office of Fossil Energy or Office of Nuclear Energy.

“This energy bill marks an American inflection point between our dirty energy past and our clean energy future,” said Johanna Neumann, senior director of Environment America’s Campaign for 100% Renewable Energy. “Regardless of their political leanings, Americans have long sent a clear and consistent message to Washington: We choose investing in renewables like solar and wind over dirty energy.”

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Jennifer Runyon has been studying and reporting about the world's transition to clean energy since 2007. As editor of the world's largest renewable energy publication, Renewable Energy World, she observed, interviewed experts about, and reported on major clean energy milestones including Germany's explosive growth of solar PV, the formation and development of the U.S. onshore wind industry, the U.K. offshore wind boom, China's solar manufacturing dominance, the rise of energy storage, the changing landscape for utilities and grid operators and much, much, more. Today, in addition to managing content on POWERGRID International, she also serves as the conference advisory committee chair for DISTRIBUTECH, a globally recognized conference for the transmission and distribution industry. You can reach her at Jennifer.Runyon@ClarionEvents.com

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