Nuclear Power Production Tax Credit Extension Bill Potential Vehicle For Orphaned Technologies

Published by Peter Lawrence on Friday, July 21, 2017 - 12:00am

There may be good news on the horizon for “orphaned” renewable energy technologies that were left out of the Protecting Americans from Tax Hikes (PATH) Act, tax extender legislation passed in December 2015. These orphaned technologies became ineligible for renewable energy tax credits at the beginning of 2017 and include many different types of renewable energy technologies, such as fuel cells, small wind projects, combined heat and power and geothermal heat pumps. But fortunately, many legislators are sympathetic to the cause of getting tax credits for these technologies extended.

Background

As a reminder, the PATH Act included a five-year extension for the PTC and investment tax credit (ITC) for wind, and ITC for solar. The extension and phase-down timeline for wind projects occurs through 2019, and the phase-down timeline for solar projects occurs through 2022 for residential projects and 2023 for commercial/utility scale projects. The extension also provided developers with the option to use with the PTC or ITC for wind projects. At the beginning of this year (1/1/17) the PTC and ITC for wind began phasing down. An overview of the phase-down timeline for these credits is as follows: 

 

Blog Chart Wind Tax Credits Phase Down
Click to Enlarge

 

Blog Chart Solar Tax Credits Phase Down
Click to Enlarge

 

New Hope

There have been a number of attempts to extend eligibility for tax credits to the set of orphaned technologies, with the most recent attempt in the fiscal year (FY) 2017 omnibus appropriations bill. That attempt failed due to opposition from House leadership. But another opportunity to make these orphaned technologies eligible for tax credits again may be in the nuclear power production tax credit (PTC) bill, which recently passed the House and is currently before the Senate.

Last month the House passed H.R. 1551 that would extend the nuclear power PTC to facilities that are placed-in-service after 2020. Under current law, nuclear projects can only receive the PTC if the projects are placed into service by December 31, 2020.  This tight timeline jeopardizes the only two nuclear power facilities currently under construction in the United States - one in Georgia and one in South Carolina. Because the construction for both facilities is taking longer than anticipated, the bill swiftly made its way through the House. H.R. 1551 is currently before the Senate and is considered a possible legislative vehicle to facilitate the extension of orphaned technologies.

On a related note, the Technologies for Energy Security Act of 2017 (H.R. 1090), a bill in the House that would extend the orphaned technologies and was introduced by House Ways and Means Committee members Tom Reed, R-N.Y., Patrick Meehan, R-Pa., and Mike Thompson, D-Calif., recently reached more than 100 cosponsors (58 Republicans and 45 Democrats as of July 21 ).  Fifteen House Ways and Means Committee members are cosponsors, meaning that more than 50 percent of the Ways and Means Committee supports the extension of these technologies. Of the 15 Ways and Means Committee members that are cosponsors, eight are Republicans and seven are Democrats, as of July 21. This strong bipartisan support combined with the strong policy nexus between extending the nuclear PTC and the orphaned technologies, and the fact that Senate was largely in support of extending the orphaned technologies in the PATH Act, added up to a good chance that the orphaned technologies will be extended later this year.

Conclusion

The multiple previous attempts to extend orphaned technologies indicate the importance of this issue to lawmakers. In fact, some senators have even stated that leaving them out of the extender legislation in December 2015 was a mistake. Therefore, there is reason to hope these orphaned technologies may be incorporated into the bill that extends the nuclear power PTC.  Stay tuned.