CQ Roll Call: Expiring Solar Tax Credit to Face a 'Slugfest' in Congress
Tuesday, Apr 21 2015
By Geoff Koss
Solar energy is booming in the United States and the industry wants everyone to know it. But winning an extension of a key solar tax break in a GOP Congress suspicious of green energy won't be easy, especially as regulatory and market forces continue to batter fossil fuels and nuclear power.
The industry's lobbying arm, the Solar Energy Industries Association, is working overtime to keep the incentive — the investment tax credit, or ITC — on the books past 2016, when its current treatment ends.
"This industry is clicking and all we need right now are stable consistent policies to remain in effect for the foreseeable future," says SEIA spokesman Ken Johnson.
Renewables continue to pick up market share, with solar leading the way.
Falling equipment prices and the continued popularity of rooftop solar are predicted to push a record-high 9 gigawatts of new solar capacity online in 2015, according to a recent analysis by Bloomberg New Energy Finance. That's enough to power more than 6 million homes.
The rapid growth has also been a boon for overall U.S. job numbers, as President Barack Obama noted this month.
"The solar industry is actually adding jobs 10 times faster than the rest of the economy," Obama said during a solar-themed event at a Utah military base on April 3.
But the good times stem in no small part from the ITC, which has been solar's primary federal incentive for a decade. First enacted in 2005, the credit allows businesses and home owners to write off 30 percent of the costs of installing solar.
Unless Congress acts, the credit at the end of 2016 drops to 10 percent for commercial projects, while disappearing entirely for residential properties.
SEIA's top priority is winning an extension, although Johnson says the group hasn't made any decisions on what it wants that extension to look like or how long it would last.
"We're looking at every possible scenario," he said. "At this point, our stated goal is to ask for an extension, not a permanent extension, not an unreasonable extension, but something that will allow developers to make firm plans four, five, six years into the future."
Slipping GOP Support
The path to an extension lies through the treacherous waters surrounding the tax code. Republican support for renewable tax breaks continues to slip, driven by a backlash over the Obama administration's climate agenda.
Further complicating matters is a coordinated campaign by conservative groups to pressure lawmakers to oppose more clean energy tax breaks.
Led by the American Energy Alliance, which has financial ties to the Koch Brothers, the coalition helped thwart the wind industry's effort to secure a long-term extension of its main tax break, the now expired production tax credit.
AEA has been less active on the solar credit, but wants to see it off the books as well.
"It's on our radar," said spokesman Chris Warren, adding that internal strategy discussions are under way. "You can definitely expect to see more from us on this."
SEIA is working to preempt the counterattack. Over the past week, it's been rolling out daily releases highlighting solar's growing economic presence in states such as Missouri, Indiana and Connecticut.
And following GOP electoral gains, the group's political action committee is focusing more attention on Republicans. According to OpenSecrets.org, SOLARPAC favored Democrats to Republicans 65 percent to 35 percent in 2014.
"We recognize that we've got to step up to the plate, and support the people who support us," Johnson said.
The PAC has already sponsored fundraisers for Senate Finance Chairman Orrin G. Hatch, R-Utah, and freshman Sen.Cory Gardner, R-Colo., while an upcoming fete will benefit Sen. Johnny Isakson, R-Ga.
Johnson rejects comparisons between the ITC and PTC. ""They're different creatures," he said.
The arguments for both credits are largely the same, including the need for policy certainty for investors, as well as the permanent tax breaks that the oil and gas industries have received for nearly a century.
Solar holds some advantages over the wind sector, including the relative newness of the ITC compared with the PTC, created in 1992. The fact that solar got a long-term ITC extension in 2008 has also meant backers haven't had to repeatedly ask Congress for more time. Even Republican wind backers are visibly frustrated by the annual fight for the PTC.
Johnson, a former long-term GOP aide on the House Energy and Commerce and Homeland Security committees, said SEIA's current focus is on educating members and staff that the benefits of solar extend far beyond the budgetary costs of an ITC extension.
"What we have to do is convince Republicans to look at both sides of the equation and also to consider what's fair," he said, referring to the permanent nature of some fossil fuel tax breaks.
But that task is complicated by the ongoing conservative campaign to undo state renewable energy mandates and subsidies, while imposing new fees on the rooftop solar systems in homes. Congress has been pretty quiet about those fights, but the pushback against solar is only expected to increase in the coming months.
"It's gonna be a battle," said Johnson. "It's gonna be a slugfest from here on out."
Source: CQ News
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