Washington (December 16, 2015)—Today, Congress unveiled its spending bill for fiscal 2016, which includes a five-year extension of the production tax credit (PTC) for wind, as well as the investment tax credit (ITC) for solar and off-shore wind.
The PTC for wind would be extended at 100 percent of its current value for 2015 and 2016, while reducing its value by 20 percent each successive year until 2020.
The ITC would allow developers to write off 30 percent of the upfront cost of a solar project for the first three years of the extension, with this credit decreasing to 26 percent in 2020 and 22 percent in 2021. The ITC has also been modified so it can now use a “commence construction” modification, providing more flexibility by allowing a solar project to be eligible for write-offs once construction has begun, rather than when it begins to produce power. This is consistent with how the PTC is currently structured.
Below is a statement by Todd Wolf, senior Washington representative for the Climate and Energy Program at UCS.
“It’s encouraging that Congress is moving forward on five-year extensions of tax credits for wind and solar that will bring certainty to clean energy investors and spur additional construction. The most effective way to deal with the consequences of climate change is to reduce carbon emissions by transitioning to a clean-energy economy.
“While this deal does not provide parity with the permanent federal tax code benefits the fossil fuel industry currently enjoys, a five-year extension of the ITC and PTC would provide greater certainty to the clean energy industry, and help avoid the boom-bust cycle resulting from the year-to-year uncertainty of expiring credits.
“However, more work remains to be done. It’s been over a decade since Congress passed comprehensive energy legislation. Renewables are competing on an uneven playing field: they’re not rewarded for the low carbon benefits their energy provides relative to the climate impacts fossil fuels create. Congress should build on these tax credit extensions by passing more robust renewable energy policies, such as a national renewable electricity standard. Congress should also develop policies to expand clean energy infrastructure, as well as a price on carbon, the leading contributor to climate change.”