Can the tax overhaul kill renewables in the US?

The U.S. renewable energy industry can breathe easy after the Republican tax bill released late on Friday preserved key tax credits that had been at risk of being removed.

What had renewable energy experts worried was a part of the tax bill concerning the tax provision called the U.S. federal Business Energy Investment Tax Credit (ITC) and Production Tax Credit (PTC), which provide a 30% tax rebate and tax credits of varying amounts per kilowatt-hour of electricity sold for wind, solar and various other renewable energy resources.

Wind and solar experts were concerned, because the House version of the tax bill phased out the ITC credit for utility and commercial projects after 2027. A step that would massively impact future storage projects, which need to go hand in hand with the further development of other renewable sources. ITC on the other hand, was untouched in the Senate version of the tax bill.

Due to those developments, different industry players wrote to senators asking that their tax credits remain exempt. And they were heard. The credits were restored in the reconciliation version of the bill now in front of Congress.

Still, the credits could be vulnerable in future tax reforms. So the question remains: Could this president kill off renewable energy by pulling the plug on tax rules that favour renewables down the road?

The overall bill, which Congress is expected to send to President Donald Trump this week includes major wins for the renewable industries, including nixing a House provision to reduce the value of the wind industry’s tax credit and eliminating the corporate alternative minimum tax. So the ultimate outcome will be situational depending on investor and project specifics.

Although advocates for renewable energies might not be completely happy with the bill earlier drafts indicated less favourable development.

Overall it will remain to be a combination of economics, technology and ingenuity that will decide the future of renewable energy in the US, not changes in the tax code.

Judith Gruendler, 21. December 2017, 16:39

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