Federal budget deal extends tax breaks for wind, solar

Wind and solar power advocates applauded the federal budget deal awaiting congressional approval that would extend federal tax credits for renewable power by five years. While the lifting of the crude oil ban received the lion’s share of the attention in the budget compromise, the bill also renews the federal production tax credit, or PTC, that benefits the growth of wind farms, and the investment tax credit, or ITC, that discounts the expansion of solar power. The tax credits were expiring, but still would have funded pending projects through 2016. Texas by far leads the nation in wind power and the Lone Star State is poised to see a lot more solar growth in the coming years, according to state projections. The American Wind Energy Association said the deal, if ultimately approved as expected, would provide several years of predictability to encourage more renewable power growth, especially with the nation’s electric grid soon requiring additional renewable power generation as more coal-fired power plants are retired. “If this passes, our industry will get a break from the repeated boom-bust cycles that we’ve had to weather for two decades of uncertain tax policies,” AWEA CEO Tom Kiernan said in a prepared statement. “AWEA has sought greater stability in the credit, with an extension for as long as possible. This plan will drive more development, and near-term prospects look strong – especially as utilities, major end-use customers, and municipalities seek more low-cost, emissions-free renewable energy.” Still, there is some concern about the tax credit being phased out. The extensions include 2015, so the five-year period only runs through 2019 and their values start getting reduced after 2016. The PTC currently provides for a tax credit of 2.3 cents for each kilowatt-hour generated over a 10-year period. According to the budget deal, the PTC and ITC are extended through 2016, but then continue at 80 percent of present value in 2017, 60 percent in 2018, and 40 percent in 2019. As before, the rules will allow wind and solar projects to qualify as long as they start construction before the end of the period. “The later years of this agreement will provide some challenges that the wind industry will work to overcome with our employees, partners and champions,” Kiernan added. Despite such concerns, the Solar Energy Industries Association touted the budget deal as well. “By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America,” Rhone Resch, SEIA president and CEO stated. Resch contended that U.S. solar power will triple by 2022, hitting 95 gigawatts. That’s enough to power 19 million homes and represents 3.5 percent of U.S. electricity generation, which is up from 0.1 percent in 2010.