WASHINGTON, July 14, 2015 - When you’re in first place and nearing the finish line, don’t let up on the gas. That’s the message from renewable energy interests as Congress dithers over renewing a “tax extenders” package of more than 50 tax incentives that expired last year – tax breaks that have helped renewable energy and other industries outpace all the competition.
Sen. Chuck Grassley, R-Iowa, tells Agri-Pulse he’s confident that key drivers of renewable energy – the Production Tax Credit (PTC) and Investment Tax Credit (ITC) – will survive the perennial repeal attempts launched by opponents like Sen. Pat Toomey, R-Pa. Renewables champion Grassley, who introduced the first PTC legislation in 1992, tells us that “I have reason to believe it will be in the chairman’s mark,” meaning he expects Senate Finance Chairman Orrin Hatch, R-Utah, to support extending the renewable energy tax breaks for either one year or for two years to move the issue past the 2016 presidential elections.
The Finance Committee is expected to mark up Hatch’s tax extenders bill on July 21, depending on progress with a highway bill. In a letter to Hatch last week, Grassley called for “extending current expired or expiring provisions” and warned against perpetuating “the boom and bust cycle that exists for renewable energy producers when Congress fails to extend these critically important tax incentives.”
One reason for delay on tax extenders is that House Ways and Means Committee Chairman Paul Ryan, R-Wis., has held out the hope of writing comprehensive tax reform legislation this year. But that has become a very unlikely prospect. Grassley says, “Forget about tax reform, there isn’t going to be any massive tax reform this year.”
Peter Kelley, vice president of public affairs at the American Wind Energy Association (AWEA), sees ample reason to extend renewable energy tax breaks. “Wind is a great cash crop and it's drought-proof,” he said in an Agri-Pulse interview. “Farmers and ranchers all across America are using leases for wind turbines to continue the rest of their operations and keep their properties in the family.”
AWEA supports ending the tax breaks once they’ve done their job. But they’re still needed, Kelley says, because “We’re still scaling up and this industry is not fully cost-competitive in all parts of the country with other forms of energy generation that have had up to 100 years of incentives which are still permanent in the tax code.”
Showing just how important tax breaks have been, Ken Johnson, vice president for communications at the Solar Energy Industries Association (SEIA), tells us that “97 percent of all installed solar capacity in the U.S. has come on-line since passage of the ITC. To put that in perspective, back in 2006, only one state, California, had 100 megawatts in cumulative capacity. Today, 20 states have that much. So solar is not just a California-specific phenomenon. We’re seeing robust solar deployment from coast to coast. California and Arizona continue to lead the pack, but New Jersey and North Carolina are third and fourth, so you don’t have to be in California or the sunny Southwest in order to make solar work.”
Johnson says most analysts predict solar will need another five or six years in order to reach grid parity in most electricity markets. “So we’re not asking for permanence, we’re not asking for a 10-year extension, we’re simply asking for enough time in order to become truly cost competitive.”
Responding to charges that solar and wind are so well established now that subsidies are no longer needed, Johnson says that certainly should be the case for oil and gas after their century of permanent subsidies. But in the case of renewable energy’s expiring tax incentives, he says, “
We don’t want to be subsidized. We just want an opportunity to compete fairly. And in a few more years, we’ll be#30 there and then the ITC can go away.”
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