A new bill from the U.S. House of Representatives includes only one-year retroactive extensions to some renewable energy credits and excludes an investment tax credit for energy storage technologies, disappointing clean-power advocates.
House Ways and Means Committee Chairman Kevin Brady, R-Texas, released a tax and oversight package late Nov. 26 that included retirement and savings enhancements, tax relief for California wildfire victims and communities affected by recent hurricanes and other natural disasters, and extensions to some existing tax credits.
"I look forward to swift action in the House to send these measures to the Senate," Brady said.
The bill would modify Section 45(d) of the U.S. tax code to extend construction deadlines for certain renewable energy technologies to qualify for production tax credits by one year, to January 1, 2019. The extensions apply to electric generating facilities powered by open- and closed-loop biomass technologies, geothermal energy, landfill gas and municipal solid waste and to incremental hydropower and marine and hydrokinetic renewable energy facilities.
Renewable energy groups were seeking more time. By only extending the credits by one year, the bill "fails to provide any incentive for future investment, even as that is supposed to be the purpose of the credits," said Todd Foley, senior vice president for policy and government affairs for the American Council on Renewable Energy. "At a minimum, the credits for these technologies should be extended through the end of 2021 to provide a stable business planning horizon."
Foley was also disappointed that the legislation did not include a federal investment tax credit, or ITC, for energy storage, a technology that supporters say is key to expanding renewable energy deployment.
Shortly before Brady released his tax proposal, a coalition of clean energy groups urged Congress to include an ITC for energy storage in one of its end-of-year bills.
"With many other competitor energy technologies proposed for the ITC, allowing energy storage access to the same ITC is critical to ensure a level playing field across all energy technologies," the industry groups said in a Nov. 26 letter to House GOP Leader Paul Ryan, House Democratic Leader Nancy Pelosi, U.S. Senate Majority Leader Mitch McConnell and Senate Democratic Leader Chuck Schumer.
The letter was sent by the Energy Storage Association, Citizens for Responsible Energy Solutions, ClearPath Action, Solar Energy Industries Association, American Wind Energy Association, National Hydropower Association, National Electrical Manufacturers Association and Advanced Energy Economy.
The groups pointed to bipartisan legislation titled the Energy Storage Tax Incentive and Deployment Act — H.R. 4649 in the House and S. 1868 in the Senate — that would allow energy storage to qualify for federal investment tax credits. Under both bills, all energy storage technologies, including batteries and pumped hydropower systems, would be eligible for the credit through modifications to Sections 48 and 25 of the federal tax code. Currently, storage systems can only qualify for investment tax credits if they are installed in conjunction with solar power systems, according to a press release on H.R. 4649.
Despite the setback in the new House bill, the storage ITC "has a very good chance" of making it into other end-of-year legislation, most likely an upcoming appropriations bill for fiscal year 2019, Solar Energy Industries Association spokesperson Alex Hobson said. If the ITC is not attached to legislation in 2018, the credit could be included in an eventual infrastructure package from Congress if there is a tax component, Hobson added.
Democrats, who are set to take control of the House in 2019, are interested in proposing infrastructure legislation in the new Congress that starts in early January, with infrastructure development a priority for both parties.