Half of pro­posed wind farms are threat­ened

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in­di­rect, the House and Se­nate bills each im­peril el­e­ments of that as­cen­sion. A Se­nate bill pro­vi­sion in­tended to stop multi­na­tional com­pa­nies from shift­ing prof­its over­seas could un­ex­pect­edly crip­ple a key fi­nanc­ing tool used by the re­new­able en­ergy in­dus­try, par­tic­u­larly so­lar, by erod­ing the value of tax cred­its that banks and other fi­nan­cial in­sti­tu­tions buy from en­ergy com­pa­nies.

The House bill’s ef­fects would be more di­rect, rolling back tax cred­its for wind farms and elec­tric ve­hi­cles, while in­creas­ing fed­eral sup­port for two nu­clear re­ac­tors un­der con­struc­tion in Ge­or­gia. Fos­sil fuel pro­duc­ers are un­der lit­tle pres­sure in ei­ther bill and some would stand to ben­e­fit: The Se­nate leg­is­la­tion would open the Arc­tic Na­tional Wildlife Refuge in Alaska to oil drilling, while a last-minute amend­ment added by Sen. John Cornyn, R-Texas, would al­low oil and gas com­pa­nies to re­ceive lower tax rates on their prof­its.

The wind in­dus­try has warned that the House lan­guage, which would re­duce the wind tax credit to 1.5 cents per kilo­watt-hour, from 2.4 cents, and change el­i­gi­bil­ity rules, could elim­i­nate over half of the new wind farms planned in the United States.

“We would see a dras­tic drop-off in wind in­stal­la­tions,” said Michael Gog­gin, the se­nior direc­tor of re­search at the Amer­i­can Wind En­ergy As­so­ci­a­tion. “We’re al­ready see­ing or­ders put on hold and projects not able to get re­fi­nanc­ing. Even the threat of this bill is hav­ing a chilling ef­fect.”

The tax bill joins a host of fed­eral pol­icy changes pro­posed by the Trump ad­min­is­tra­tion that could crimp the growth in clean en­ergy. Those in­clude a pro­posed En­vi­ron­men­tal Pro­tec­tion Agency roll­back of Pres­i­dent Barack Obama’s Clean Power Plan for re­duc­ing car­bon emis­sions and the loom­ing pos­si­bil­ity that Trump will im­pose tar­iffs on im­ported so­lar pan­els, which could in­crease the cost of so­lar power.

“There is a per­fect storm of bad news that im­pacts in­vestor con­fi­dence in re­new­ables,” said Trevor Houser, a for­mer Obama ad­min­is­tra­tion cli­mate of­fi­cial who now tracks en­ergy eco­nom­ics as a part­ner at the Rhodium Group. “It is shap­ing up to be a pretty rough 2018.”

No one is pre­dict­ing the demise of so­lar and wind de­ploy­ment, which rely less each year on tax sub­si­dies as their costs de­cline and were al­ready pre­par­ing for a grad­ual phase­out of the sub­si­dies by 2020. But the sud­den changes could slow what had been a steady pace of adop­tion and raise elec­tric­ity prices for con­sumers in states like Cal­i­for­nia, which have set manda­tory tar­gets for the share of re­new­ables in their elec­tric­ity mixes. In states without such tar­gets, in­clud­ing Texas, more ex­pen­sive new re­new­able plants could lose out to nat­u­ral gas gen­er­a­tion.

“In the long run, we think wind and so­lar will be­come cheap enough to com­pete without sub­si­dies,” said Amy Grace, a re­new­ables an­a­lyst at Bloomberg New En­ergy Fi­nance. “But in the short term, those tax cred­its have been im­por­tant.”

The Trump ad­min­is­tra­tion has made no se­cret of want­ing to pull the plug on tax pref­er­ences for so­lar and wind, con­tend­ing that those in­dus­tries should have to com­pete on their own merit.

“I would do away with these in­cen­tives that we give to wind and so­lar,” Scott Pruitt, the chief of the En­vi­ron­men­tal Pro­tec­tion Agency, said in Oc­to­ber. “I’d let them stand on their own and com­pete against coal and nat­u­ral gas.”

Con­gres­sional aides say the treat­ment of re­new­ables will be an is­sue in the con­tin­u­ing ne­go­ti­a­tions be­tween the Se­nate and House over a fi­nal bill. Law­mak­ers have be­gun the process of rec­on­cil­ing the two bills, which have sev­eral cru­cial dif­fer­ences be­yond just the en­ergy pro­vi­sions.

In a po­ten­tially bad sign for the re­new­able in­dus­try, the list of Repub­li­can sen­a­tors named to the con­fer­ence com­mit­tee Wed­nes­day did not in­clude Sen. Charles E. Grass­ley of Iowa, a long­time cham­pion of the wind in­dus­try who has op­posed the House’s ef­forts to cur­tail wind tax cred­its be­fore a phase­out sched­uled for 2020.

While the Se­nate ver­sion pre­serves the im­por­tant tax cred­its for wind and so­lar, it in­cludes a pro­vi­sion that could un­ex­pect­edly un­der­mine their ef­fec­tive­ness – and has prompted ma­jor con­cern from the in­dus­try.

Cur­rently, the com­pa­nies that build wind and so­lar farms of­ten do not have large enough tax li­a­bil­i­ties to take full ad­van­tage of the re­new­able cred­its. So they will sell the cred­its to banks and other in­vestors who can take ad­van­tage of them to lower their own tax bur­dens.

Roughly two-thirds of wind projects and three-fourths of so­lar projects in the United States are sup­ported by such tax eq­uity fi­nanc­ing.

But un­der a pro­vi­sion in the Se­nate bill known as the Base Ero­sion An­tiAbuse Tax, in­tended to pre­vent com­pa­nies from out­sourc­ing in­vest­ment abroad, many of those same banks could face a new min­i­mum tax that re­duces the value of those wind and so­lar cred­its.

That, in turn, could dry up de­mand for such tax-fi­nanc­ing deals.

Re­new­able com­pa­nies may have to look else­where for fi­nanc­ing, which could ei­ther in­crease costs or stop some projects.

Abi­gail Ross Hop­per, the pres­i­dent and the chief ex­ec­u­tive of the So­lar En­ergy In­dus­tries As­so­ci­a­tion, said that the pro­vi­sion could neg­a­tively af­fect 39 gi­gawatts worth of new so­lar projects around the coun­try – nearly as much as all of the so­lar power that has been in­stalled to date.

“The jury is still out on whether this was a care­fully crafted hits on re­new­able en­ergy or an un­in­tended con­se­quence,” she said. “But we’re try­ing to make sure mem­bers un­der­stand what the im­pacts of these changes would be.”

New York Times file photo

The Repub­li­can tax bills mov­ing through Congress could sig­nif­i­cantly hob­ble Amer­ica’s re­new­able en­ergy in­dus­try through a se­ries of pro­vi­sions that would scale back in­cen­tives for wind and so­lar power projects like this so­lar panel grid north of Los An­ge­les.

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