Expiring tax breaks threaten baseload power — groups

Source: Geof Koss, E&E reporter • Posted: Friday, September 9, 2016

Renewable energy interests are once again scrambling to extend a key tax incentive that will expire at the end of the year.

In a letter sent to House and Senate leaders yesterday, the National Hydropower Association, American Biogas Council, Biomass Power Association and Energy Recovery Council called for lawmakers to take “immediate action” to extend tax breaks that will expire Dec. 31.

“Every day that passes without an extension increases the uncertainty for project developers in our industries and creates a further negative economic market signal to the investment community,” the groups wrote.

Last year’s omnibus tax package extended the investment tax credit for solar and production credit for wind for five years, with both credits being phased down before expiring. The deal separately extended the PTC for other sources for two years — one retroactively covering 2015 — setting the stage for the December expiration.

Compounding the situation is the looming expiration of the ITC for non-solar sources in December because sources that qualify for the PTC have the option to claim the ITC, which allows developers to write off 30 percent of costs.

Senate Minority Leader Harry Reid (D-Nev.) has repeatedly said the omission of other qualifying sources was a mistake, but efforts to correct the error have foundered so far this year due to pressure from outside conservative groups (E&E Daily, March 18).

The signatories of yesterday’s letter note the snafu provides a competitive advantage for wind and solar.

“The looming expiration also puts our industries at a significant competitive disadvantage with wind and solar projects with which we compete in bidding on State-level Requests for Proposals for renewable electricity, particularly now that they have the certainty that their tax incentives will be in place over a longer term,” they wrote. “The end result — less reliable renewable baseload power will be deployed, which we believe is not the intent or desire of Congress and not in line with an all-of the-above energy strategy.”

Democrats continue to press for a fix to the ITC “error,” as well as extensions of other key renewable breaks, but Scott Slesinger, the legislative director for the Natural Resources Defense Council, said yesterday that Republicans “want to get something in return” for a correction.

While House Republicans are wary of once again extending a host of expiring tax breaks, the jockeying is expected to continue in the lame duck session of Congress after the November election.