Renewable Energy Gets A Boost From Tax Extenders Included in Stimulus, Spending Bill Package

Renewable energy received a boost with the enactment of the federal spending bill and COVID-19 relief package on Dec. 27, which includes tax extenders and about $35 billion in spending authorizations to support energy research and development programs. The legislation includes a two-year extension of the Investment Tax Credit for solar generation, a one-year extension of the Production Tax Credit for wind generation, and establishes a 30 percent tax credit for offshore wind projects through 2025.

The legislation extends the current 26 percent solar tax credit through the end of 2022, reducing it to 22 percent in 2023 and 10 percent from 2024 for commercial projects while ending the credit for residential installations. Projects that start construction in 2021 would have a four-year period to come online and utilize the tax credit, with the statutory in-service deadline set to before Jan. 1, 2026. For onshore wind, the law extends the credit for one year at 60 percent of the project’s full value. Prior to this, the solar credit was set to decrease to 22 percent starting in 2021, and the wind tax credit was scheduled to expire after 2020.

The American Wind Energy Association commended the move, applauding Congress for “recognizing the enormous potential of offshore wind, America’s largest untapped electricity source.” The Solar Energy Industries Association cheered the law underscoring the “opportunity to build a stronger, more reliable, and more equitable American energy economy” over the next few years.

The bill also authorizes about $35 billion for clean energy research and development programs focused on solar, advanced nuclear, geothermal, wind, energy storage, grid modernization, and carbon sequestration technologies.

The renewable energy industry will likely have a lot to gain from the policies of the incoming administration. U.S. President-elect Joe Biden’s energy agenda prioritizes clean energy and climate action, with a far-reaching strategy, which includes rejoining the Paris Climate Agreement, committing to achieve a carbon-free power sector by 2035, and banning new oil and gas permitting on public lands and waters. Biden’s clean energy plan, which envisions economy-wide net-zero emissions by 2050, includes a $2 trillion investment over four years to deploy the resources to set the nation on a course to meet the ambitious climate progress.