In a bipartisan boost from Congress, tax credits for solar and wind energy (ITC and PTC), carbon capture and biofuels appear set to be extended.
Congressional leaders agreed Sunday, December 20, 2020 on a $900 billion bipartisan pandemic relief bill bundled with a $1.4 trillion omnibus government spending package. The legislation contains several provisions designed to boost investment in clean energy. The new package, which is subject to final votes in the Senate and House expected today, would extend federal tax credits that incentivize construction of new wind and solar power plants, as well as tax credits for carbon capture, biofuels and alternative fuels, fuel cells and energy efficiency. At least in that respect, it may fairly be called a stimulus bill, not just a relief.
Renewable Energy Tax Credits
The energy provisions have been attached to must-pass legislation to continue funding government operations until the end of the fiscal year and to provide economic relief during the ongoing pandemic. The bill has the support of the leadership of both parties, in both the Senate and the House of Representatives. By extending renewable energy tax credits, the new COVID-19 pandemic relief and government spending bill should prolong the renewables building boom. The tax credit extensions also mitigate the effects on developers of disrupted supply chains, force majeure claims, permitting delays and labor disruptions due to the pandemic, allowing extra time to meet the new deadlines to qualify for the credits.
The looming deadline to commence construction of renewable power facilities before the end of this year to avoid missing these tax incentives has spurred massive investments in renewable energy generation over the past couple of years. According to a report by BloombergNEF, the $55.5 billion invested in U.S. renewable energy capacity projects last year (second only to China globally) represented an increase of 28% over 2018 in large part due to the race to preserve access to tax credits slated to expire or step down by the end of 2020. And 2020 looks set to surpass 2019 in the dollar amount of new investment and total megawatts of new renewable generating capacity.