A Spanish renewable energy developer’s pending bankruptcy has clouded the future of a controversial utility-scale solar power project on federal lands in the California desert that was once one of the Obama administration’s top-priority projects. Abengoa Solar, in a formal petition filed this week with the California Energy Commission (CEC), announced that it has an agreement in place to transfer ownership of the Palen Solar Electric Generating System to a subsidiary of San Diego-based EDF Renewable Energy Inc.
Wind industry executives and proponents were similarly bullish about how the extension would affect them. The production tax credit, which expired at the end of 2014, is to be extended retroactively through 2016 and then decline in value each year until it is phased out in 2020. The five-year step-down offers one of the longest periods of certainty in more than a decade.
The House’s top tax writer said yesterday he’ll continue discussions next year over a key solar tax break extended as part of the deal to end the crude oil export ban, following a failed effort by a Democratic lawmaker to fix what has been called a mistake in drafting the provision. The extension was a key priority for Democrats in agreeing to lift the 40-year-old export ban, but as written only extends the credit for solar, leaving out other qualifying sources, including combined heat and power systems, geothermal, small wind, and fuel cells.
A majority of House Republicans joined dozens of Democrats yesterday to pass a two-year package of tax cuts, finishing half of the colossal year-end fiscal deal that next heads to the Senate. But leaders are hedging their bets on whether the $1.15 trillion omnibus can make it across the finish line. Asked if Democrats would join with Republicans to provide the votes, House Minority Leader Nancy Pelosi (D-Calif.) was blunt. “No, we’re talking it through,” she told reporters, acknowledging there was no backup plan. Pelosi said Democrats have concerns about air pollution and carbon emissions, especially in the context of the global climate accord reached in Paris.
Congress could wrap up work for the year as soon as today if House leaders cobble together enough votes to approve a $1.15 trillion omnibus spending bill. As House lawmakers voted yesterday on tax legislation, leaders and rank-and-file members expressed concerns about being able to pass the omnibus.
The report calls the shift “not the beginning of the end for fossil fuels” but instead “marks the end of the beginning for the low carbon economy.” It points out that oil, gas and coal still “generate two-thirds of electricity, power over 75 percent of industry, and fuel 95 percent of the global transport fleet.” But the report adds that “public pressure to find ways to reduce” fossil fuel use is increasing, as demonstrated by the 196-nation global climate agreement finalized in Paris on Saturday.
The Energy and Water Development Appropriations Subcommittee portion of the omnibus includes $37.2 billion, $3 billion above 2015 enacted levels and more than $1 billion above the president’s request. Within that pot of money, the Department of Energy would see an almost $800 million increase for energy programs, helping to boost the agency’s total budget to $29.7 billion
Wind and solar advocates said five-year renewals of their tax breaks would provide needed certainty to spur further growth. “This plan will drive more development, and near-term prospects look strong as utilities, major customers and municipalities seek more low-cost, emissions-free renewable energy,” said Tom Kiernan, CEO of the American Wind Energy Association, an industry group. A five-year extension of the solar-tax credit will lead to more than $125 billion in new private sector investment and add as many as 140,000 jobs, said Rhone Resch, president and CEO of the Solar Energy Industries Association.
While the spending package boosted funding for fossil and nuclear research, programs for wind and solar were not so lucky. The omnibus provided about $2 billion for energy efficiency and renewable energy, including a total of $241 million for solar and about $95 million for wind power. “As the deal stands, at 88 percent of 2015 budget levels and 66 percent of the budget proposed by the administration, $95 million is still short of what is needed to support the critical technology R&D work and other areas of [DOE’s Office of Energy Efficiency and Renewable Energy] wind program,” said John Anderson, American Wind Energy Association senior director for permitting and environmental affairs issues.
The language would extend the production tax credit (PTC) at 100 percent for 2015 and 2016, while reducing its value by 20 percent each successive year until 2020. The legislation would extend the investment tax credit (ITC), which allows developers to write off 30 percent of the cost of a solar facility, at that level for three years, while shrinking the allowance to 26 percent in 2020 and 22 percent in 2021. Democrats scored a victory by winning a modification to the ITC that will allow facilities to qualify for the credit when they “commence construction” rather than when they begin to produce power.