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The fate of key renewable energy tax credits remains up in the air, as House and Senate leaders continue negotiations on an extenders package they hope to pass before the end of the year.
Aides and lobbyists said yesterday that multiyear extensions of the production tax credit of 2.3 cents per kilowatt-hour and the 30 percent investment tax credit remain under discussion, although the duration of the extensions is tied up in broader conversations over making some of the dozens of expired credits permanent.
House Majority Leader Kevin McCarthy (R-Calif.) told reporters yesterday that discussions continue but predicted a deal would be struck.
“I believe we’ll get this done before the end of the year,” he said, adding that negotiations remain fluid.
“In these situations, it’s always coming down to the last week to show what mix we’re able to get,” McCarthy said.
The extenders package passed by the Senate Finance Committee in July extends the PTC for two years (E&ENews PM, July 21), but that bill omitted the ITC, given that it doesn’t expire until the end of 2016.
Neither the PTC nor ITC was addressed in the House Ways and Means Committee’s extenders package that cleared the panel in September (E&E Daily, Sept. 17).
However, one proposal would extend both credits for five years but phase both out over time. It’s also possible that the extensions could be pared back, depending on whether there’s agreement to make a number of other tax credits permanent, which is what House Republicans want.
The National Association of Manufacturers yesterday penned a letter to lawmakers urging quick action on extenders, calling for the credits to either be made permanent or extended for multiple years.
Senate Finance Chairman Orrin Hatch (R-Utah) told E&E Daily yesterday that the package will “likely” include an extension of the PTC accompanied by a phaseout.
“They’ve all said to me they can live with a phaseout,” he said of industry. “I think it’s likely to keep that going, but we’ll just have to see how it’s phased out. Sooner or later, it has to be phased out.”
But the fate of the ITC was less clear. “I don’t know what we’ll do on that in this package,” Hatch said. “We’re still in the middle of it all.”
Solar backers are also working to change the qualification terms for the ITC from “placed in service” to “commence construction,” which would allow facilities to claim the credit based on the time a project broke ground.
That change was applied to the PTC several years ago, and Sen. Dean Heller (R-Nev.), a member of the Finance Committee, recently told E&E Daily he was “comfortable” the tweak would be included in the extenders bill Congress passes this year.
However, efforts to extend and revise the ITC hit a speed bump last month, when major rooftop company Sunnova Energy Corp. wrote to the heads of the House and Senate tax-writing panels to oppose both an extension and expansion of the credit.
The Solar Energy Industries Association, which supports the ITC, noted in a statement that Sunnova’s board of directors has “deep financial ties to the fossil fuel industry.”
“For the vast majority of the 8,000 solar businesses in the United States, extending the ITC is critical,” the group said. “It is a catalyst for future growth of an industry that is becoming an American economic powerhouse and will create hundreds of thousands of jobs, contribute to energy self-sufficiency for all Americans and improve the environment. If they don’t want to claim the credit, they don’t have to.”
The extenders package is likely to be joined with the omnibus, although Hatch suggested a final decision hasn’t been made.
However, he noted that the estimated $700 billion package – which he declined to offer a budgetary cost for – was unlikely to be offset.
“As has been the case with extenders matters, we probably will not have pay-fors,” he said.
The measure’s cost remains a factor, Hatch indicated. “It can get too big where it won’t pass at all,” he said.
Ultimately, he sounded guardedly optimistic of a deal.
“I think we’ll get it, I think we have to,” he said. “But there’s no guarantee we’ll get it.”
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