The Republican tax reform proposals are all the talk across the nation right now. After accessing the House proposal renewable energy experts are finding that while the proposals would impact renewable energy growth, the wind and electric vehicle (EV) industry would negatively feel the impact much more than solar power.
“Weakening the PTC and ITC would reduce the number of wind and solar projects that get built, stalling the amazing progress the country’s made on shifting to cleaner sources of electricity,” said Michelle Robinson, director of the Clean Vehicles Program at the Union of Concerned Scientists.
The difference are the types of tax credits each gets. Under the House proposal the Investment Tax Credit (ITC) would see some changes but the Production Tax Credit that helps make wind more competitive could be significantly reduced. That’s despite the fact that both were extended under bipartisan agreement at the same time. Meanwhile the $7,500 tax credit for purchasing an EV would be eliminated.
“It’s a mistake for House leaders to target electric vehicles and renewable energy in this tax bill. These provisions show how little concern the authors of this bill have for the real-world consequences of their proposals,” Robinson said.
Under the current proposal the ITC would ramp down the ITC over time, quicker than originally proposed. Commercial, home and utility solar would get the 30 percent ITC through 2020 and ramps it down to 26 percent in 2020 and to 22 percent for 2021. However, for homeowners going solar after 2021 they would be no ITC. Larger projects would get a 10 percent ITC through the end of 2027. It would end in 2028, unlike current law.
The Solar Energy Industries Association (SEIA) said it will work with people in Congress to ensure the ITC remains as strong as possible. It’s currently more embroiled with the Suniva trade case that’s made recommendations on solar import tariffs, which could have a greater impact on the industry.
The wind industry warns that by swiftly and significantly reducing the PTC, the tax reform proposal puts over $50 billion of investment and 50,000 U.S. jobs at stake. In 2015 Congress previously agreed to draw the PTC down over five years from 2.4 cents per kilowatt hour. In 2017 new projects receive 80 percent of that and it will fall to 60 percent next year and 40 percent the year after before ending. Under the proposal the PTC would fall to 1.5 cents per kilowatt hour.
“While building a wind project can take a year or less, the planning of those projects can take several years. Taking away the inflation adjustment and commence construction provisions of the PTC could effectively pull the rug out from the large number of projects that are in advanced stages of development and the jobs, investments, and tax revenues in rural communities that go along with them,” Robinson warned.
“Despite comments to the contrary, this proposal reneges on the tax reform deal that was already agreed to, and would impose a retroactive tax hike on an entire industry,” said Tom Kiernan, CEO of the American Wind Energy Association (AWEA). “The House proposal would pull the rug out from under 100,000 U.S. wind workers and 500 American factories, including some of the fastest growing jobs in the country. We expect members of the House and Senate to oppose any proposal that fails to honor that commitment, and we will fight hard to see that wind energy continues to work for America.”Tweet