U.S. Tax Reform Could Be ‘Disastrous’ for Renewables
U.S. tax reform is beginning to send a chill through the U.S. renewable energy sector, Renewable Energy World reports, based on preliminary legislation that passed the House of Representatives and the Senate Finance Committee before legislators started their Thanksgiving break.
The provisions have a few hoops to jump before they become law, and there’s some sense that the tax reform package as a whole faces an uncertain vote in the Senate. But both current versions of the legislation are producing headaches for different elements of the wider renewables community.
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The House bill is particularly problematic for the U.S. wind industry, said American Wind Energy Association spokesperson Evan Vaughan.
“The House is proposing to retroactively change the rules for investment in wind power, years after contracts have been signed and turbine orders placed,” he told Renewable Energy World, a move that “would have potentially disastrous implications for the wind industry’s growth and the manufacturing supply chain.”
The difficulties would fall on wind developers that signed contracts in 2015 or 2016, but haven’t yet started construction, he added. “Companies are faced with two bad options: either take a substantial loss on the value of their project because they would be losing a substantial amount of value on the credit, or walk away entirely.”
RE World Chief Editor Jennifer Runyon notes that the House bill also “repeals the ‘permanent’ 10% solar investment tax credit for projects that begin construction after 2027, and repeals the Electric Vehicle tax credit.”
The Senate Finance Committee, meanwhile, “keeps all provisions for renewable energy tax credits in place,” Runyon notes. “However, it doesn’t include any extensions for the renewable energy technologies (biomass, geothermal, fuel cells, and incremental hydro, among others) that were previously omitted from the past tax credit extension.”
The process was set to continue when Congress resumes today.