Senate Passes Renewable Energy Tax Credits
September 24th, 2008
The Senate voted 93 to 2 on September 23rd to pass a comprehensive tax package. The Bush Administration has signaled its support for the measure, which helped lead to the overwhelming vote in support of the bill. The legislation, H.R. 6049, includes extension of several renewable energy tax incentives, protection of millions of Americans from the Alternative Minimum Tax (AMT), and extensions of expiring family and business tax cuts (including the Research and Development Tax Credit).
The renewable energy tax incentives total approximately $18 billion and are fully offset with other revenue raisers in the bill. However, the entire package is not fully offset which could still cause problems when the House considers the measure in the coming days. We will closely monitor and report on actions taken by the House to complete work on these important tax incentives.
Helios Strategies, and its renewable energy clients, applauds the Senate’s work to finally vote in favor of extending the expiring renewable energy tax credits. While the delay in passage of the bill has had a chilling impact on renewable energy projects across the country, the situation would be much worse if Congress leaves town for the election without having these provision signed into law.
The measure cleared by the Senate contains the following renewable energy provisions:
Extension and Modification of the Production Tax Credit - The Senate measure extends the Production Tax Credit (PTC) for wind for one year. The bill expands the definition of qualifying facilities for the PTC to include those that generate power from marine renewables (waves and tidal), as well as biomass. The PTC for marine renewables, solar and biomass are extended for two years. These provisions, along with other related matters, are estimated to cost $5.8 billion over ten years.
Long Term Extension of Energy Credit - The bill extends the thirty percent investment tax credit for solar energy property and qualified fuel cell property, as well as the ten percent investment tax credit for microturbines, through 2016. The bill increases the $500 per half kilowatt of capacity cap for qualified fuel cells to $1,500 per half kilowatt of capacity, and adds small commercial wind as a category of qualified investment. The bill also provides a new ten percent investment tax credit forcombined heat and power systems and geothermal heat pumps. The estimated cost of this proposal is $1.9 billion over ten years.
Long-term Extension and Modification of the Residential Energy-Efficient Property Credit - Under the Senate bill, solar tax credits will be extended for eight years, for both commercial and residential consumers. It includes a complete elimination of the $2,000 cap for residential systems, allowing residential credits to rise to the thirty percent credit that commercial buildings get, and includes an allowance for utilities to make use of the commercial credit. The residential energy-efficient property credit would be extended through 2016, and the definition of the systems that qualify for that credit would be expanded to include wind investment and also home geothermal heat pumps, which would get thirty percent off, with a cap of $6,667. The estimated cost of this proposal is $1.3 billion over 10 years.
New Clean Renewable Energy Bonds (CREBs) — The bill authorizes $800 million of new clean renewable energy bonds to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewable and trash combustion facilities. This $800 million authorization is subdivided into thirds: 1/3 for qualifying projects of state/local/tribal governments; 1/3 for qualifying projects of public power providers; and 1/3 for qualifying projects of electric cooperatives. The bill also extends the termination date for existing CREBs by one year. The estimated cost of this proposal is $267 million over 10 years.