Archive for December 2015

Congress Passes Tax Credits for Solar and Wind: ‘Sausage-Making at Its Most Intense’

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The biggest federal policy development of the year for renewables plays out on Congress’ last day of work in 2015.

By Stephen Lacey
December 18, 2015

Lawmakers in the House and Senate passed a spending package today that includes multi-year extensions of solar and wind tax credits, plus one-year extensions for a range of other renewable energy technologies.

The pair of bills, which included tax extenders and $1.1 trillion in funding to keep the government running for the next year, passed hours before lawmakers adjourned for the holidays.

“May the force be with you,” said Senator Dianne Feinstein, urging her fellow Senators to vote in favor of the package shortly after the House approved the bills.

The force was certainly with renewables.

Under the legislation, the 30 percent Investment Tax Credit (ITC) for solar will be extended for another three years. It will then ramp down incrementally through 2021, and remain at 10 percent permanently beginning in 2022.

The 2.3-cent Production Tax Credit (PTC) for wind will also be extended through next year. Projects that begin construction in 2017 will see a 20 percent reduction in the incentive. The PTC will then drop 20 percent each year through 2020.

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Also included were geothermal, landfill gas, marine energy and incremental hydro, which will each get a one-year PTC extension. Those technologies will also qualify for a 30 percent ITC, if developers choose. In addition, the bill expanded grants for energy and water efficiency.

Business groups and analysts say the extensions will support tens of billions of dollars in new investment and hundreds of thousands of new jobs throughout the U.S.

“There’s no way to overstate this — the extension of the solar ITC is the most important policy development for U.S. solar in almost a decade,” said MJ Shiao, GTM’s director of solar research.

According to GTM Research, the ITC extension will help spur nearly 100 cumulative gigawatts of solar installations by 2020, resulting in $130 billion in total investment. More than $40 billion of investment will be “directly attributable to the passage of the extension,” said Shiao.

The American Wind Energy Association expects similar growth. The group did not issue precise figures, but said the PTC extension would support tens of gigawatts of new wind projects through 2020.

The legislation also lifts a 40-year ban on exports of crude oil produced in the U.S. In exchange for lifting the ban, Democrats pushed for multi-year extensions of renewable energy tax credits and demanded that Republicans strip out any riders that would weaken environmental laws.

Both sides got what they wanted.

However, Pelosi publicly worried yesterday that she didn’t have enough votes to support the bill. Many Democrats expressed concern about the oil export ban tradeoff, saying it would increase subsidies to fossil fuels and boost carbon emissions.

Congressional leaders and the White House lobbied hard to convince the Democratic base that the bill would be a win for the environment.

“While lifting the oil ex­port ban re­mains atrocious policy, the wind and solar tax credits in the Om­ni­bus will eliminate around 10 times more car­bon pollution than the ex­ports of oil will add,” wrote Pelosi in a letter to lawmakers.

Katherine Hamilton, a partner with 38 North Solutions, called the bill “sausage-making at its most intense.”

“The product should be palatable for most parties in clean energy. Extensions for renewables and efficiency tax credits were key sweeteners. In addition, clean energy R&D funding, land and water conservation funds, and clean energy funds were included in the deal,” she said.

Other independent analysts found that the deal would be a net positive for the climate. Although emissions would increase slightly because of increased drilling activity, they would be easily offset by increasing renewable energy development and decreased coal consumption.

“Our bottom line: Extension of the tax credits will do far more to reduce carbon dioxide emissions over the next five years than lifting the export ban will do to increase them. While this post offers no judgment of the budget deal as a whole, the deal, if passed, looks like a win for climate,” wrote Council on Foreign Relations fellows Michael Levi and Varun Sivaram.

The tax credit extensions cap a big month for renewable energy policy.

In early December, world leaders agreed to a framework for lowering global greenhouse gas emissions — a deal that will leverage hundreds of billions of dollars in private investment for clean technologies.

And earlier this week, California regulators issued a new proposal on net metering that would preserve the retail rate paid to rooftop solar systems. The new rules — combined with the continued federal tax credit — will ensure strong activity in the top solar state.

National groups will now likely reset their sights on local battles around the U.S., said Hamilton.

“The renewable energy industries can turn their focus to state and local policies, siting and permitting issues, and compliance strategies for the Clean Power Plan,” she said.

President Obama is expected to sign the bill into law today.

Congress Is on the Verge of Passing Multi-Year Extensions for Solar and Wind Tax Credits

Lawmakers reached a compromise as part of a spending package. Will there be enough votes to pass it this week?

by Stephen Lacey
December 16, 2015
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House Republicans unveiled legislation late Tuesday night that included multi-year extensions of tax credits for solar and wind.

The credit extensions were attached to a broad set of spending measures as part of a negotiation with Democrats over lifting the ban on exports of U.S. crude oil.

Rhone Resch, president of the Solar Energy Industries Association, predicted in November that solar tax credits would likely be added to any deal around lifting the oil export ban. He called it “our best opportunity.”

“Democrats are saying, ‘We need to get something for it,’ and the White House is chiming in too,” said Resch.

This month, Republicans demanded an end to the 40-year-old ban as part of a legislative tax and spending package that would fund the government through next fall.

Although many Democrats oppose ending the ban, they saw it as an opportunity to demand extensions of the Investment Tax Credit (ITC) for solar and the Production Tax Credit (PTC) for wind.

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Yesterday afternoon, Democratic leaders said they would only support the Republican proposal if renewable energy credits were added to a tax or spending bill.

“We have 2 paths: 1. Pair oil export ban with policies to reduce carbon emissions; 2. Pass gov’t funding without oil/renewables,” tweeted Senator Harry Reid yesterday afternoon.

In 1975, Congress made it illegal for domestic drillers to ship crude out of the country. The export ban was designed to protect America from volatile oil prices in the wake of the Arab Oil Embargo. As U.S. production dwindled over the proceeding years, the policy was not contested.

Today, America is a leading producer of crude — and drillers argue they should be able to export oil as an incentive to expand production.

Some see the tradeoff as a good deal.

“An oil-exports-for-renewables-tax-credits deal looks likely to be a win-win. Removing the oil export ban is good policy. Supporting zero-carbon energy innovation, including through appropriate deployment subsidies, is good policy,” wrote Michael Levi, a senior fellow at the Council on Foreign Relations, in a recent analysis of the deal.

Last night, House Speaker Paul Ryan unveiled an omnibus spending bill that would lift the ban, while also extending solar and wind tax credits for two years.

The PTC — a 10-year, 2.3-cent per kilowatt-hour credit — would be extended through 2020. After December of 2016, the credit would be cut each year until it fully expired in 2020.

The ITC — a 30 percent credit for utility, commercial and rooftop solar installations — would get phased down through 2022. The credit would stay at 30 percent through 2019, and then fall to 26 percent in 2020. It would drop to 22 percent in 2021 and 10 percent in 2022. The bill also offers a commence-construction clause that would extend the credit to any project in development before 2024.

“The extension to the federal ITC is without question a game-changer for U.S. solar’s growth trajectory. Between now and 2020, the U.S. solar market is poised to see a number of new geographies open up with a 30% ITC, within both distributed and utility-scale solar,” said Cory Honeyman, a senior solar analyst at GTM Research.

The House and Senate will likely vote on the package Thursday night or Friday morning.

Although Democrats have signaled their willingness to support the deal, House Speaker Nancy Pelosi told Bloomberg that broad agreement wasn’t guaranteed — even with strong extensions of renewable energy credits.

Opponents see lifting the ban as a massive subsidy to oil producers and an environmental risk. In an op-ed this week, climate activist Bill McKibben explained why so many progressive environmentalists opposed a change to the law.

“What makes the plan to lift the ban especially galling is that the administration and congressional Democrats insist they’re getting a reasonable deal because the Republicans will concede tax breaks for solar and wind producers in return. But the logic of the Paris accords — with their theoretical commitment to a world that will warm just 1.5 or 2 degrees — means that we don’t get to keep making this kind of tradeoff,” wrote McKibben.

Speaker Ryan assured reporters that he would get the votes to pass the package.

“I am not going to predict how the vote count will go down,” Ryan said this morning during a press event. “Look, in negotiations like this, you win some, you lose some. Democrats won some, they lost some, we won some, we lost some. At the end of the day, we are going to get this done.”

CPUC Rejects Plea for PCIA/Exit Fee Relief

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Dear LEAN Members, CCA Supporters and Friends,
Our efforts at the CPUC this morning yielded disappointing results with a 4-1 vote (Sandoval in opposition) to approve the proposed decision increasing the 2016 Power Charge Indifference Adjustment (PCIA) by an uprecedented 95%.  This outcome was not a big surprise but disappointing nonetheless. The Commission did, however, agree to include additional parties in the next phase of the ERRA proceeding (having previoulsy rejected them) and hold a workshop on the PCIA issue, tentatively scheduled for February 16, 2016. More on that as plans develop.
On the plus side, the press conference and public comment period were a success and covered by a number of regional and statewide news outlets.  Commissioner Florio, the assigned Commissioner to this case, received a deluge of letters and e-mails which did not go unnoticed by the Commission. More than 50 people showed up for the press conference and hundreds expressed their concern through correspondence and during public open time. Thank you so much!
Our hope is that the February workshop will yield some positive results for long-term PCIA reform. But hope springs eternal, and we expect that any reforms will be modest at best. Legislative action may be required.
In an e-mail earlier today, Beth Kelly, Legal Director of MCE said it best: “We’ve lost this battle, but with your continued support, we hope to win the war.”  We couldn’t do this work without all of you and we are grateful for your steadfast participation.
Onward and stay tuned…today wasn’t the last word on utility exit fees.
A few photos from today’s event:
Ratha Lai_ Sierra Club
Ratha Lai, Sierra Club
Shawn Marshall_ LEAN
Shawn Marshall, LEAN Energy US
Tom Butt_ Richmond Mayor
Richmond Mayor, Tom Butt
Geof Syphers_ Sonoma Clean Power
Woody Hastings, Center for Climate Protection
Lane Sharman, San Diego Energy District Foundation
Francesca Vietor_ SF Water Sewer
Francesca Vietor, San Francisco Public Utilities Commission
 LEAN Energy US is committed to the accelerated expansion and competitive success of clean energy CCA nationwide. LEAN (Local Energy Aggregation Network) is a member-supported organization, serving a national network of community leaders, local governments, consumers, advocacy organizations, power suppliers and developers working toward the protection and establishment of CCAs in their States and cities. To learn more, please visit us at 

 

Wind, solar credits on the chopping block?

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Congress could be close to phasing out the tax credits that have, for years, supported the booming wind and solar energy industries.

Tax writing committees in the House and Senate are working to introduce and pass a package of tax breaks before the end of the year to extend or renew a number of incentives like those for low-income housing, scientific research and small businesses.

While the wind and solar industry and their allies among environmentalists and Democrats want to protect the tax incentives for the long term, many conservatives want to phase them out.

As the committees negotiate the tax packages, lawmakers and observers say the most likely outcome is that both credits will be phased out over a five-year period.

The wind incentive is a production tax credit, meaning it gives utilities money back for each unit of electricity produced. The solar industry has an investment tax credit, based on the money spent to install the solar panels.

A phase-out would provide a certain amount of stability for the industries. But environmentalists lament the end of the incentives shortly after President Obama unveiled a sweeping climate change regulation for the power sector that’s expected to increase demand for renewable power like never before.

Obama frequently cheers the growth of renewable energy like wind and solar, and the low costs of the power — due in part to federal help — helps make the case for his climate regulations.

“These tax incentives are crucial for these clean energy technologies like wind and solar to continue to compete,” said Melinda Pierce, legislative director at the Sierra Club.

“The mature industries like oil and gas continue to enjoy subsidies, and as wind and solar continue to grow, they absolutely need the certainty of these types of tax incentives to ensure that they can fill that market space that’s being created as we move away from coal,” she said.

The wind credit expired at the end of 2013. Congress renewed it in late 2014, but only for that year, and it has not been in place for 2015.

The solar incentive is due to expire at the end of 2016. But the industry is hoping that Congress will extend the credit now as it takes up a larger tax package.

The Solar Energy Industries Association said it does not need the tax credit permanently, but it would prefer a five-year extension without the phase-out.

Rhone Resch, the group’s president, said the solar industry thought it wouldn’t need the credit past 2016, but economic factors like the Great Recession changed the calculus.

“Our costs are down by 80 percent, we’re scaling up, we’re becoming more cost-competitive. But we do need a little bit longer,” he said. “We do, in the long run, have the intention to not be part of the tax code.”

The American Wind Energy Alliance is advocating for a “long-term” renewal of its credit, but the group does not get more specific than that.

The Senate Finance Committee passed a bill extending both the wind and solar credits. The House Ways and Means Committee’s September bill included neither.

Curt Beaulieu, a tax attorney at Bracewell & Giuliani, said the House Ways and Means Committee recently showed its members a draft negotiation bill that included the five-year phase-outs, but then ran into objections that the entire package was too expensive, and considered changing those credits.

“As recently as Friday morning, it looks like there has been life reborn in negotiating the package,” Beaulieu said. “My guess is that it would be similar to what the negotiated package was, but they would cut back on some of the costs by taking away some of the permanent provisions.”

Some lawmakers are discussing the possibility of inserting a provision into the tax bill to lift the ban on exporting crude oil, reasoning that Democrats could get a better deal on the renewable energy incentives in return. Sen. Orrin Hatch (R-Utah) and Rep. Kevin Brady (R-Texas), the top tax writers in each chamber, said oil exports are among the possibilities for the deal.

Conservatives object to the credits, saying they’re expensive and federal government ought not pick winners and losers in energy.

Rep. Kenny Marchant (R-Texas), one of Congress’ most vocal opponents of the wind credit, said he’d prefer that it not be renewed at all, but he’ll take a phase-out as a win.

“It needs to be phased out, and I’d prefer a quicker phase-out. But I’ll take anything that looks like a victory.”

Nick Loris, an economist at the conservative Heritage Foundation, said the wind and solar industries should be allowed to compete on their own without the federal government’s help.

“We want to get rid of targeted tax credits and subsidies for all sources of energy and technologies, and these are two that are generous handouts to an industry that claims that they don’t need support, and that they’re robust and economically healthy,” Loris said. “If that’s the case, they should survive and be competitive without these tax credits.”

But Rep. Earl Blumenauer (D-Ore.) warned that ending the incentives could threaten the success of renewable power, which is important in the fight against climate change.

“There are other things we have to be doing in this space,” Blumenauer said of the climate fight. “But for now, we’re fighting to get as much as we can to not upset what’s happening with renewables. They need stability and continued progress.”

Climate draft deal reached at Paris conference

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Negotiators from 195 countries in Paris on Saturday agreed to a tentative deal to reduce global carbon emissions, CNN reported.
The United Nations Framework Convention on Climate Change (UNFCCC) posted a copy of the draft on its website and pledged to work through next week at the COP21 Paris conference to reach a final agreement.

Christina Figueres, executive secretary of the UNFCCC, tweeted that the draft is “One more step in writing of history.”

President Obama said at the kickoff of the conference that he was optimistic a deal would be struck.
“I think we’re going to solve it,” he said. “I think the issue is just going to be the pace and how much damage is done before we are able to fully apply the brakes.”
Ten Senate Democrats went to Paris on Friday in a show of support for the talks.
Sen. Ben Cardin (D-Md.) on Saturday told reporters that the group was “determined to make sure that Paris is a successful conference, and that we will see a day where we can meet the goal of reducing the damage that we’re doing to our planet.”
Joining Cardin in Paris are Sens. Cory Brooker (D-N.J.), Chris Coons (D-Del.), Al Franken (D-Minn.), Ed Markey (D-Mass.), Jeff Merkley (D-Ore.), Brian Chatz (D-Hawaii), Jeanne Shaheen (D-N.H.), Tom Udall (D-N.M.), and Sheldon Whitehouse (D-R.I.).
House Minority Leader Nancy Pelosi (D-Calif.) said she is considering bringing a coalition of House Democrats to the talks at some point.
Republicans have expressed doubt about the efficacy of the talks and accused Obama of unduly prioritizing climate change over the threat posed by radical Islamic terrorism.

Bay Area communities gearing up to create their own power systems

From Silicon Valley to the East Bay to the Central Coast, a “people’s power” movement is sweeping through California that will give local residents a choice to ditch PG&E and buy cleaner — and possibly cheaper — energy from the cities and counties where they live.

To its proponents, the idea is a no-brainer. But to its critics, it’s just a lot of hype — a feel-good solution that will lead to unstable prices, empty promises and — at least for the time being — no additional green energy.
  Overseen by a team of energy experts and a board of elected officials, new community-run utilities are buying power from the grid, procuring a higher percentage of renewable energy — think solar and wind, as well as methane from dairy cows — than PG&E, while aiming for a price around or even below the giant utility’s rates. The new power systems also are charged with developing more local renewable energy.

Elected officials in Silicon Valley — representing an alliance of Santa Clara County and most of its cities — are poised to decide in March whether to take the key steps necessary to develop a new electricity system that they say could be lighting homes by early 2017. And San Jose, the region’s largest city, is considering creating its own system.

Similar alliances are moving forward in San Mateo, Alameda, Contra Costa, Santa Cruz and Monterey counties. San Francisco’s power system is set to launch next year.

Whenever these plans are adopted, customers in the cities and counties are automatically enrolled, though they can opt out of the program at any time.