At the tail end of December, Congress passed a COVID relief bill that included a number of important packages targeted at renewable energy. While the bill didn’t include everything that the industry needed, it did extend and expand some important elements of what is growing the market into 2021, just in time for a new administration to rev things up.
The $2.4 trillion dollar package saw over $900 billion in funds released immediately at the start of the year. Solar and wind advocates didn’t get everything on their wishlist from Congress, and many of those items will be back on the table just as the Biden administration sweeps into office. Widely considered more environmentally-minded, the forty-sixth President of the United States is expected to be an ally of sustainability and renewable energy efforts, and Congress has given him something to get started within his first days in office.
The easiest things to pass in Congress are those that already have, which is why it should come as little surprise to see some of the Investment Tax Credits extended. For solar, the credit will still shrink each year, though it’ll be extended at its 26% rate into 2022 and down to 22% in 2023. Congress also extended the deadline for projects using the tax to be completed until January 1, 2026, a significant help for those delayed by COVID-19.
Offshore wind will get a fill 30% ITC for all projects started by 2025. Many experts see offshore wind as an industry that needs significant investment in order for the US to meet sustainability goals, and the timing of this ITC program could prove critical.
There are also new opportunities where such projects might be developed. The bill also raises the possibility of expanding renewable energy products onto public land. The next Secretary of the Interior will have the option to reduce lease rates in an effort to meet a new goal of generating 25 GW of renewable energy on federal land by 2025.
The bill also provides for more direct investment in these industries, including $1.5 billion for solar, $625 million for wind, and $1.08 billion for energy storage over the next five years. There are also substantial funds set aside for research and development.
Perhaps the most important item left off this bill was any kind of a clean energy standard, nor does it create a carbon-pricing system that would help carbon emissions from the electrical supply sector.
There’s also some disappointment in a lack of energy storage-specific ITC programs. The language of the bill allows for energy storage to be used as a part of the solar tax incentive, but only with some key requirements on what sources charge the battery. There is a strong indication that an energy storage ITC could be on the books with the new administration, possibly even with the first 100 days.
This bill, plus what happens in the next three months, could make or break the United States’ energy program for a generation. There’s hope that efforts to invest and support renewable energy and reduce emissions are on the horizon, as well as a return to the Paris Climate Agreement and other climate-conscious efforts to get America back on the world stage. Still, there’s room for improvement in how the US handles its energy policy, and we’ll be working to keep tabs on it all.
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