Senator Heinrich previews transmission tax credit plan

Source: By Jeremy Dillon, E&E News reporter • Posted: Thursday, November 7, 2019

A leading Senate Democrat on the Energy and Natural Resources Committee said yesterday he was readying legislation to offer an investment tax credit for transmission line developers.

The proposal, from Sen. Martin Heinrich (D-N.M.), which is still in the development phase, could help attract additional financing into the build-out of infrastructure needed to more fully unleash renewable energy onto the electric grid and meet state clean energy goals.

It also could add another energy-related tax incentive measure to a crowded field looking to grab a ride on a potential tax extenders package that supporters say could clear Congress on upcoming, must-pass spending legislation.

Floated during a legislative subcommittee hearing yesterday on a set of 11 bills related to clean energy research and development improvements, Heinrich said he was working on securing some unnamed Republican backers who have expressed interest before he introduces his bill.

“Where this is right now, I have floated this with people across the industry who have done this type of work, and they have said it would make a real difference,” Heinrich told E&E News in a brief hallway interview.

Heinrich said the general framework of his bill would enable an investment tax credit for transmission development that meets a “regionally significant” threshold.

Such an incentive, he argued, would represent a more cost-effective way to help promote transmission development than other measures, although the New Mexico Democrat admitted he’s still working out the exact bar for how much the credit would be worth and what projects would qualify.

The need for additional transmission lines to help move power from rural outskirts to more heavily populated corridors has increasingly come to the forefront of energy planning and the push to add more renewable energy onto the grid.

“It could potentially be a game changer,” Heinrich said. “We are going to have to build a lot more transmission to have a completely green grid. You have to be able to move those electrons from where they are generated to where they are used.”

That infrastructure has hit hurdles, both political and regulatory, that have added years and millions of dollars to development, resulting in the abandonment of more than one high-profile transmission project.

An example is the proposed Plains and Eastern Clean Line project, a $2.5 billion, 705-mile transmission line from Oklahoma to Tennessee to deliver up to 4,000 megawatts of wind electricity. It stalled last year after running into individual state permitting problems.

“Any time we are also then crossing borders, when it is federal land, when it is federal and state and private land, there are just incredible permitting challenges, and reducing those challenges is a priority for geothermal, wind and solar but for all of our energy generating resources,” said Daniel Simmons, assistant secretary for the Office of Energy Efficiency and Renewable Energy, during the hearing.

The Federal Energy Regulatory Commission has also looked to help better encourage transmission build-out through a notice earlier this year that asked for comments on possible improvements to the agency’s electric transmission incentives policy.

As to whether the Department of Energy could support such a tax credit, Simmons was uncommitted to Heinrich’s question during the hearing.

“That is not something we have looked at [at] DOE, but from a very broad perspective, financing is obviously critical,” Simmons said. “When we have these hurdles, whether they are political or regulatory, it just increases those financing costs and makes those projects much more difficult.”

Heinrich hinted to E&E News after the hearing the bill could become public sooner rather than later as his office puts the finishing touches on language.

Even with a quick introduction, it may miss the tax extenders package. House and Senate leaders are trying to find common ground on a host of credits (E&E Daily, Nov. 6).

“I wish I would have had this idea a year and half ago,” Heinrich said. “But I’m talking with some Republicans. We’ll see where it goes.”