Clear vitality trade teams are cheering the last-minute inclusion of key tax incentive extensions and billions of in analysis and improvement funds that discovered their method into the $2.four trillion spending bundle and coronavirus reduction invoice handed by Congress on Monday night time. (Whether or not the invoice would be vetoed by President Donald Trump remained an open query as of Wednesday morning.)
However photo voltaic and wind energy teams and vitality storage advocates didn’t get all they’ve been asking from Congress within the invoice — they usually’re looking for help for these further insurance policies from the incoming Biden-Harris administration and lawmakers from each events.
What’s within the invoice: Tax credit, renewables on public lands
There’s little doubt that photo voltaic and wind energy will profit from the funding tax credit score (ITC) extensions within the invoice. For photo voltaic, that features a two-year extension of the ITC at its present 26 % via 2022 and at 22 % via 2023, in addition to an prolonged Jan. 1, 2026 deadline for finishing initiatives which have claimed the credit score primarily based on once they began development beneath ‘secure harbor’ provisions.
“That’s a fairly vital change,” Abigail Ross-Hopper, CEO of the Photo voltaic Vitality Industries Affiliation, mentioned in a Tuesday webinar. “As we take into consideration this photo voltaic decade, this will get us a whole lot of the best way there.”
Offshore wind additionally gained full 30-percent ITC credit for initiatives began by the tip of 2025. That may bolster a nascent trade that’s seen delays in federal allowing that might have threatened the buildout of an enormous new clear vitality useful resource within the coming decade, in keeping with Dan Shreve, WoodMac’s head of worldwide wind analysis.
These “commonsense emergency reduction measures” characterize “a bipartisan vote of help for the renewable trade and the a whole lot of hundreds of Individuals constructing our clear vitality future,” Gregory Wetstone, CEO of the American Council on Renewable Vitality (ACORE), mentioned in an announcement.
Photo voltaic and wind teams had been additionally cheered by language within the invoice to advertise the event of renewable vitality on public lands — one thing that the incoming Biden-Harris administration could possibly accomplish by way of govt motion on the Inside Division and DOE, slightly than via acts of Congress.
This contains directions to DOE’s Renewable Vitality Coordination Workplace to streamline allowing processes on public lands, giving incoming Vitality Secretary Jennifer Granholm the authority to cut back lease charges on photo voltaic and wind initiatives, and setting a goal of 25 gigawatts of renewable vitality on public lands by 2025.
“Now the laborious stuff is available in — ensuring the administration takes that laws and enacts it in a method that’s constructive and useful,” SEIA Chairman Invoice Shuster mentioned in Tuesday’s webinar.
Renewable and vitality storage within the $35 billion vitality R&D bundle
Photo voltaic, wind and vitality storage teams additionally praised the parts of Vitality Division R&D funding geared toward clear vitality applied sciences, together with $1.5 billion for solar energy, $625 million for wind energy, and $1.08 billion for vitality storage over the subsequent 5 years.
Applications focused for analysis vary from bettering effectivity and reducing manufacturing and supplies prices, to pilot initiatives and software program platforms to combine these applied sciences into the broader energy grid at native or system-wide scale.
The R&D bundle additionally contains $2.2 billion over the subsequent decade for DOE grid modernization analysis, grants for demonstration initiatives and instruments for native and state grid regulators to speed up the adoption of recent expertise and grid controls, and a hybrid microgrid program for remoted communities.
A few of this funding will assist “scale back the ‘tender’ prices of photo voltaic and batteries to additional increase entry” to solar energy, Anne Hoskins, chief coverage officer at main U.S. residential photo voltaic installer Sunrun, mentioned in an announcement.
The vitality storage R&D packages set in place by the Higher Vitality Storage Know-how (BEST) act additionally provide vitality storage corporations alternatives to increase their function in renewable-powered grids, mentioned Jason Burwen, senior coverage director for the Vitality Storage Affiliation.
Past $500 million for vitality storage analysis and improvement, the invoice directs $71 million per yr, or $355 million over 5 years, to aggressive solicitations for vitality storage demonstration initiatives open to states, utilities and personal corporations.
These initiatives are supposed to reveal “not solely new applied sciences, however understanding new functions and new enterprise fashions,” Burwen mentioned in a Tuesday interview. That’s essential for an vitality storage sector that’s centered not simply on decreasing battery prices, however on “ensuring their full worth to the grid may be realized.”
“In the event you can’t interconnect successfully, when you can’t present the flexibleness you’ll be able to present as a result of the grid’s not designed to see it, you’ll be able to’t understand all the worth you’ll be able to provide.”
What’s lacking: Clear vitality commonplace, direct pay, storage ITC
The invoice did include “sense of Congress” language directing the Vitality Division to prioritize R&D to supply 100 % “clear, renewable, or zero-emission vitality sources.” Nevertheless it doesn’t embody Biden administration priorities comparable to a clear vitality commonplace or carbon pricing mechanism that might scale back electrical energy sector carbon emissions to zero by 2035.
These insurance policies face an uphill battle in Congress. Republicans might retain their Senate majority relying on the outcomes of the January runoff elections for Georgia’s two senate seats, and Democrats will maintain a slim 10-seat margin within the Home.
“We’re actually engaged with most of the teams which can be engaged in a carbon pricing mechanism. However I’m undecided it’s the correct time,” Erin Duncan, the group’s vp of congressional affairs, mentioned in Tuesday’s webinar.
The tax credit score extensions in Monday’s invoice additionally lack the “direct pay” or refundability choices being sought by wind and photo voltaic builders anxious that the financial downturn attributable to the coronavirus pandemic will scale back the demand for tax fairness investments from banks and monetary establishments. Whereas it’s attainable that one other alternative for this might emerge in Congress subsequent yr, “in terms of direct pay, a whole lot of Republicans don’t have an urge for food for that,” Shuster mentioned.
Nor does the invoice provide the vitality storage and photo voltaic industries one other key plank of their federal coverage agenda — creating an ITC for standalone vitality storage programs. Whereas that was a part of SEIA’s 100-day agenda for the Biden administration, “it didn’t make the minimize on this extenders bundle,” Duncan mentioned.
ESA’s Burwen agreed that a standalone storage tax credit score was a key objective for future laws. “We’re going to maintain pushing.”
ESA and SEIA are additionally looking for readability from the Biden administration over the still-uncertain tax credit score standing of batteries paired with solar energy.
Below the phrases of an IRS recommendation letter from 2015, storage prices may be counted as a part of a photo voltaic set up’s prices topic to the ITC, if it’s charged at the very least 75 % of the time by the photo voltaic panels, slightly than from the grid, over the course of a yr. However this understanding has by no means been adopted up by formal IRS steering that might make clear the uncertainties contained within the recommendation letter, Burwen identified.
As for tax credit for batteries being retroactively added to photo voltaic programs, a 2018 IRS recommendation letter signifies that residential photo voltaic PV homeowners can apply the ITC to batteries added later, however provided that they’re charged fully from photo voltaic. Bigger-scale photo voltaic initiatives lack any provision to use the ITC to batteries added later.
Clear IRS steering opening ITC standing for batteries being added to present photo voltaic installations of all sizes could possibly be a boon for initiatives and solar-rich areas going through a disconnect between when solar energy is produced and when the grid wants it most, Burwen mentioned.
“The one largest rapid step the Biden administration might take” could be “to formalize that IRS steering,” and “make it retroactive,” he mentioned. “That alone could possibly be an enormous increase to storage.”