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US House bill could extend wind production tax credit, expand storage incentive

Highlights

Also could include credit extension for solar

Faces opposition in the US Senate

Washington — The head of the US House of Representatives' tax-writing panel may propose to prolong a federal wind energy production tax credit that is set to expire in 2020 and expand an investment credit for energy storage projects as part of an upcoming tax extenders package.

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But the bill is not complete and faces a high chance of opposition in the US Senate. "Nothing has been finalized in terms of what will or won't be in the package," said Erin Hatch, a spokesperson for the House Committee on Ways and Means.

On May 12, Bloomberg Government reported that the committee's chairman, US Rep. Richard Neal, D-Massachusetts, will likely include an extension of the wind energy credit in a pending extenders package. Neal also said he was optimistic on including an extension of the federal investment tax credit for utility-scale solar power. Hatch confirmed Neal's comments to S&P Global Market Intelligence but did not have information on when the Ways and Means Committee would release the bill.

In late 2015, the US Congress reached a bipartisan deal to extend the wind production credit by five years to projects that start construction by Jan. 1, 2020, and to phase down the investment tax credit for solar projects until it reaches 10% from 2022 onward. But Democrats, who regained control of the House in the November 2018 midterm elections, have said the Trump administration's efforts to roll back environmental regulations and withdraw the U.S. from the Paris Agreement on climate change have fundamentally altered the market for renewable power, thereby changing the conditions under which Congress reached the 2015 tax deal.

STORAGE

In addition to possibly prolonging the federal wind and solar energy credits, the House's upcoming extenders package may expand incentives for energy storage projects, one industry source said. Lawmakers in the House and Senate have introduced companion legislation that would enable nearly all stand-alone battery or other storage projects, including those paired with wind power, to qualify for a 30% investment tax credit that would decline over time. Currently, only storage projects paired with solar power can qualify for the credit.

Even if Neal attaches the energy tax provisions in his upcoming bill, the legislation may not go far. As part of the bill, Neal is expected to propose clawing back some of the corporate and estate tax cuts that President Donald Trump signed in late 2017, a move Republicans in the GOP-majority Senate will almost certainly oppose. In addition, U.S. Sen. Chuck Grassley, R-Iowa, who heads the Senate Committee on Finance, has said he will not push for another extension to the wind credit after agreeing in 2015 to phase out the incentive, and the Senate committee left out those extensions in its own bipartisan extenders bill introduced in February.

-- Molly Christian, S&P Global Market Intelligence, newsdesk@spglobal.com

-- Edited by Jeffrey Ryser, newsdesk@spglobal.com