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Renewable Energy Tax Credit News Briefs – December 2019

The New Home Energy Efficiency Act (S.B. 2595 and H.R. 4646) was introduced Oct. 15 and includes a provision to reinstate and increase the Internal Revenue Code Section 45L credit for energy efficient new homes. The legislation would reinstate and extend the Section 45L credit, which expired at the end of 2017, through 2022. The bill would also expand the credit from $2,000 to $2,500 for single-family and multifamily buildings that are three stories or less.

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The Home Energy Savings Act was introduced Sept. 16. Legislation S.B. 2588 in companion with H.R. 4506 would extend the Internal Revenue Code Section 24C tax credit for qualified energy efficiency improvements to Dec 31, 2026. The legislation would increase the maximum credit toward the cost of energy efficient upgrades from 10 to 15 percent and increase the credit cap from $500 to $1,200. The bill would also increase the lifetime cap for Section 25C claims from $500 to $1,200.

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Legislation was introduced to the U.S. Senate Sept. 27 to amend the Internal Revenue Code of 1986. The Agriculture Environmental Stewardship Act of 2019 would make qualified biogas property and qualified manure resources recovery property eligible for the energy credit and to permit renewable energy bonds to finance qualified biogas property, and for other purposes. S.B. 2542 would allow energy tax credits through 2021 for investments in qualified biogas property or qualified manure resources recovery property. The bill is a companion bill to H.B. 3744 which was introduced July 12, 2019.

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Reps. Peter King, R-NY., and Bill Pascrell, D-NJ., introduced the Offshore Wind Power Act of 2019 (H.R. 4887) that would extend the renewable energy investment tax credit (ITC). The legislation is the companion bill to S. 1988 which was introduced in June. Under the legislation, the ITC for offshore projects would be extended until late 2027 or the year after the U.S. has increased its offshore wind capacity by at least 3,000 megawatts from the capacity on Jan. 1, 2020.

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Mayors from 231 cities Oct. 22 sent a letter to congress asking for passage of the Renewable Energy Extension Act. The investment tax credit is set to begin a five-year phasedown in 2020 from a 30 percent credit to a 10 percent credit, and H.R. 3961 and S. 2289, which were introduced in Congress earlier this year would extend the renewable energy ITC for five years. Under the legislation, the phasedown wouldn’t start until 2027.

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Analysis from Wood Mackenzie Power & Renewables and Solar Energy Industries Association released Sept. 24 reported that an extension of the ITC would spark $87 billion in new private sector investment and create 113,000 jobs by 2030. Key data from the analysis includes an increase in annual investment to $41 billion and the offset of 363 million metric tons of CO2 emissions over the next 10 years. The predicted 82 GW of additional capacity spurred by an extension would be enough to power more than 15 million homes.

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The American Wind Energy Association wants to see onshore wind projects be made eligible for the ITC that is currently available to solar plants. The pursuit of ITC eligibility represents a major strategic shift for the onshore wind industry, and is predicted to relieve tension and competition with solar sector developments. The extension of the ITC is viewed as a better deal than the phasing down of the production tax credit (PTC). The PTC eventually drops to zero while the ITC is set to remain at a permanently reduced level.

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LevelTen reported U.S. power purchase agreement (PPA) prices in the third quarter of 2019 decreased for solar power projects but increased more for wind projects resulting in a net price increase. Over one-third of developers surveyed expect PPA prices to increase in 2020 due to competition and expiration of tax credits, and 41 percent of developers expect PPA prices will remain about the same in 2020. Increases are expected to continue due to the phase down and expiration of the ITC and PTC.

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The decision by the U.S. Treasury Department in WestRock VA. Corp. V. United States was upheld Nov. 4 by the U.S. Court of Federal Claims. WestRock Virginia Corp. was denied a $39 million grant request under the American Recovery and Reinvestment Act (ARRA). Under WestRock’s reading of the act, any owner that used property to produce even a small amount of electricity would receive the maximum statutory recovery, which the court ruled isn’t the purpose of the ARRA legislation. 

Journal Category:

Renewable Energy Tax Credits

Authors:

Novogradac

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