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Renewable Energy Tax Credits News Briefs - March 2013

Bloomberg New Energy Finance found that global investment in clean energy dropped 11 percent in 2012 compared to the year before. Investments in 2011 totaled more than $300 billion and fell to less than $270 billion in 2012. Nearly $150 billion of last year’s total came from utility-scale renewable energy projects like wind farms, solar parks and biofuel plants. China was the biggest investor last year with $67.7 billion, an increase of 20 percent over the previous year. The United States followed with $44.2 billion invested in 2012, a 32 percent drop compared to 2011. Italian investments plunged 51 percent to $14.7 billion and Spain decreased its investments 68 percent to $3 billion. Japan grew its investment 75 percent to $16.3 billion, as did South Africa with $5.5 billion.

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U.S. Rep. Mike Pompeo, R-Kan., introduced the 2013 Energy Freedom & Economic Prosperity Act, which would eliminate all energy tax credits, including renewable and conventional energy sources. H.R. 259 would repeal tax credits for alcohol fuel, biodiesel, alternative fuel mixtures, certain renewable energy projects, nuclear power facilities, qualifying advanced coal projects and qualifying gasification projects. It proposes a reduction in corporate income tax rates to compensate for the repealed tax credits. Supporters of the bill include the American Energy Alliance, Americans for Tax Reform and the National Taxpayers Union. Read the bill at www.energytaxcredits.com.

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Interior Secretary Ken Salazar announced the Restoration Design Energy Project initiative, which sets aside nearly 200,000 acres of public land across Arizona as potentially suitable for utility-scale solar and wind energy development. It also designates the Agua Caliente Solar Energy Zone, the third solar zone on Arizona public land and the 18th zone nationwide. Solar energy zones are areas with high solar potential, few resource conflicts and access or potential access to transmission lines. The Agua Caliente zone is a 2,550-acre site in Yuma County that can generate more than 20MW.

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Secretary Salazar announced on Jan. 16 that he intends to resign at the end of March. During his four years in office, he helped launch 18 utility-scale solar energy projects on public lands. He also established seven national parks and 10 new wildlife refuges. Before President Barack Obama appointed him as Secretary of the Interior in 2009, Salazar represented Colorado in the U.S. Senate. He was the attorney general of Colorado from 1999 to 2005.

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The U.S. Army’s largest solar power system was recently launched at White Sands Missile Range, N.M. An Energy Savings Performance Contract provides the base with a new $16.5 million, 4.5MW solar photovoltaic system that reduces energy consumption by 10 percent. The project was financed with private funds and with an Energy Services Agreement, which allowed for a tax grant. Construction began in July and ended in December.

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Google Inc. announced a $200 million equity investment in the Spinning Spur Wind Project, a 161MW facility built by EDF Renewable Energy in Oldham County, Texas. The wind energy project began construction in February 2012 and began commercial operation in December. It consists of 70 Siemens 2.3MW turbines. Spinning Spur has the capacity to power 60,000 average U.S. homes and has been contracted to Southwestern Public Service Company, a subsidiary of Xcel Energy that serves Texas and New Mexico.

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The U.S. Department of the Treasury requested public comment on its annual collection of performance reports and certifications from Section 1603 applicants. Under the Section 1603 provision, applicants are required to submit annual reports for five years after their projects are placed in service. The information collected is used to evaluate the applicants’ eligibility to receive payment, the amount of payment allowable, compliance with applicable laws and the program’s effectiveness. Comments are due March 26.

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New York Gov. Andrew Cuomo outlined a plan to boost the state’s clean energy economy and development in his 2013 State of the State address. One of his initiatives is to establish a $1 billion “Green Bank” that will offer loans and grants to promote clean energy projects. New York would be the second state to set up a Green Bank; Connecticut implemented one in 2011. Another initiative in Cuomo’s plan is to make Article X, a power plant siting law, permanent. Article X establishes a centralized certification process for electric generating facilities and the newest version institutes a siting board, provides funding, coordinates a state environmental review and authorizes the siting board to override certain local laws.

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Maryland Gov. Martin O’Malley introduced the Maryland Offshore Wind Energy Act of 2013. A substantively similar bill passed the House of Delegates in 2012. The bill would provide tax credit incentives for the development of 200MW offshore wind facilities. There is a cap on the residential surcharge at $1.50 per month and 1.5 percent cap for larger commercial users. To qualify for the credit, developers must demonstrate that their projects will create jobs, protect public health and provide a net economic benefit to the state. The bill also contains a $10 million offshore wind business development fund for small businesses.

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JPMorgan Chase & Company bought a $35.7 million share in interest on eight Ormat Technologies Inc. geothermal power plants in California and Nevada. The plants are part of Ormat’s Ormesa, Heber and Mammoth complexes in California and the company’s Steamboat and Brady sites in Nevada. JPMorgan will pay Ormat an additional $8.7 million for 25 percent of the value of the plants’ production tax credits (PTCs) through 2016.

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U.S. Sen. Bernie Sanders, I-Vt., opposed a moratorium that would place a three-year ban on wind power projects in Vermont. During a January news conference in his Senate office, Sanders said the moratorium would send the wrong message to the rest of the country and would be a setback against efforts to stop global warming.

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The American Wind Energy Association announced that 2012 was the strongest year for the U.S. wind energy industry, with more than 13,000MW of electric generating capacity installed and $25 billion in private investment leveraged. Last year saw 190 projects installed across 32 states and Puerto Rico. This brings the country’s cumulative wind capacity to more than 60GW. With 42 percent of power provided by wind, last year also marked the first time wind became the number one source of new electric generating capacity. Partly due to the impending expiration of the federal PTC slated for Dec. 31, 2012, which was extended by the American Taxpayer Relief Act of 2012, last year’s fourth quarter became the strongest quarter in U.S. wind power history after 8,380MW were installed.

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SolarCity has completed a new backup servicing agreement with an AA-rated financial institution. SolarCity representatives said that the servicing agreement is designed to attract new investments and expand capital resources by providing investors additional insurance against asset servicing risk in return for a lower cost of capital.

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Mosaic, an online solar project market, sold out its first four projects within 24 hours. More than 400 investors committed between $25 and $30,000 each, raising $313,000 in total. The solar projects range from 47KW to 102KW and will be installed on the rooftops of affordable housing buildings. Projects offer investors a 4.5 percent annual return with terms of about nine years.

Journal Category:

Renewable Energy Tax Credits

Authors:

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