Non-wind renewables voice support for PTC modification

Source: Nick Juliano, E&E reporter • Posted: Wednesday, December 12, 2012

While wind has grabbed most of the attention in the push to extend the production tax credit, other renewable energy industries are lobbying in support of a small but significant tweak to the credit’s eligibility requirements endorsed by a Senate committee earlier this year.

Representatives of the biomass, hydropower, geothermal and waste-to-energy industries wrote President Obama applauding his support for the PTC.

Unlike wind, which loses access to the PTC at the end of this year without an extension from Congress, those industries retain access through next year. But they say the structure of the credit, which requires projects to be fully operational before developers can claim it, still means that new development will be depressed next year.

Representatives of the Biomass Power Association, Energy Recovery Council, National Hydropower Association and Geothermal Energy Association are throwing their support behind a modification to the credit’s eligibility requirement championed by Sen. Chuck Grassley (R-Iowa) and endorsed earlier this year by the Senate Finance Committee. That change, which wind supporters also are lobbying for, makes eligible any projects that begin construction by the end of next year (E&E Daily, Dec. 10).

“The Finance Committee recognized that many renewable power projects are unable to move forward because developers and investors are concerned that those projects cannot be completed before the renewable electricity production credit expires,” the trade association leaders write in a Dec. 7 letter to Obama. “This is particularly true in the case of biomass, hydropower, geothermal and waste-to-energy facilities, which have longer development, permitting and construction timelines than do wind energy facilities.”

House Republicans are seen as the main impediment to the Finance Committee language making it into law. An extension of the PTC and other so-called tax extenders is expected to be included in a “fiscal cliff” bill being negotiated between Obama and House Speaker John Boehner (R-Ohio). But lobbyists working the issue say House Republicans are wary of the higher cost that goes along with the Finance modification. The Joint Committee on Taxation estimates it would cost about $12 billion over the next decade.

Grassley said he has all five members of Iowa’s House delegation, two Republicans and three Democrats, on board with his modification to the PTC requirements. He said he lobbies other House members “only as I see them” but doesn’t “seek specific ones out.” He declined to name any other members he has persuaded to support the change.

Bob Cleaves, president and CEO of the Biomass Power Association, says the decision to send the letter to the president was part of an “all hands on deck” approach to “communicate with both our supporters and the folks who need to come around” on supporting an extension.

The importance of base-load renewable sources, which provide steady electricity supplies unlike intermittent sources like wind, is “getting lost in a much stronger chorus of discussion around the wind PTC,” Cleaves said in an interview yesterday.

Biomass has about 2,025 megawatts of installed capacity. Cleaves pointed to three projects completed in recent years — two 100 MW plants in Florida and Texas and a 75 MW facility in New Hampshire — that “wouldn’t have happened without the benefits” of the PTC. It takes four to five years to get a biomass facility up and running, Cleaves said, so activity already has sharply declined in the industry well ahead of next year’s deadline.

Over the longer term, Cleaves said his industry would lobby for a longer-term extension of the credit and incentive parity with wind.

Open-loop biomass, geothermal and waste-to-energy projects get 1.1 cents per kilowatt-hour from the PTC, whereas wind, geothermal and closed-loop biomass get 2.2 cents per kWh. Open-loop biomass uses recycled waste from agriculture, forestry or other activities as a feedstock, whereas closed-loop biomass relies on plants grown exclusively for use in the facility, according to the Congressional Research Service.

The hydro industry also has seen activity decline because of PTC uncertainty, said Matthew Nocella of the National Hydropower Association. He said an informal survey of the association’s members revealed close to two-dozen projects — comprising about $500 million worth of investment — are in limbo pending a change to the PTC.

Because certain hydro projects were made eligible for the PTC in the 2005 energy bill, more than 100 projects, such as upgrades to existing dams, have been completed, and those have produced about 1.5 million megawatt-hours, enough to power roughly 145,000 homes for a year, Nocella said.