Renewable energy groups lobby to extend US investment tax credits
The 30 percent federal tax credit for a range of energy efficiency measures is set to expire at the end of 2016 and industry lobbyists are campaigning to extend or reinstate expired tax credits.
Calling it "critically important to America's future," the Solar Energy Industries Association (SEIA) today launched a national campaign to extend the 30 percent solar Investment Tax Credit (ITC) past 2016 by emphasizing tax fairness.
SEIA President and CEO Rhone Resch announced the campaign before a raucus crowd at the opening session of Solar Power International (SPI), the largest solar trade show in America, with nearly 20,000 people expected to attend. The campaign will begin in earnest in 2015, when a new Congress is sworn in.
"Since the United States first began incentivizing energy development, the average annual subsidy has been $4.8 billion for oil and gas, compared to just $370 million for all renewable technologies," Resch said.
"How is this fair? How is this a leveling playing field? How does this kind of policy support an 'all-of-the-above' energy policy? Simply put, it doesn’t."
Since the ITC went into effect in 2006, solar investment has exploded. Solar installations in 2014 will be 70 times higher than they were in 2006, and by the end of this year, there will be nearly 30 times more installed solar capacity. There are also more than 143,000 Americans currently employed in solar.
"We’ve gone from being an $800-million industry in 2006 to a $15-billion industry today," Resch continued. "The price to install a solar rooftop system has been cut in half, while utility systems have dropped by 70 percent. It’s taken the U.S. solar industry 40 years to install the first 20 gigawatts (GW) of solar. Now, we’re going to install the next 20 GW in the next two years.
"And finally, during every single week of this year we’re going to install more capacity than what we did during the entire year in 2006. Tell me that’s not worth fighting for," Resch told the cheering crowd.
The Geothermal Exchange Organization (GEO) announced that it is actively supporting “tax extender bills” that are now under consideration by the U.S. House of Representatives and in the U.S. Senate. The bills would reinstate and extend several tax incentives for geothermal heat pumps that expired last year.
According to GEO President Doug Dougherty, “Section 179 for expensing and bonus depreciation for ‘qualified property,’ which includes geothermal heat pump installations, both expired on Dec. 31, 2013. Both of these tax benefits are extremely significant for the commercial geothermal heat pump (GHP) market.”
Under the lapsed expensing provision, he said, “a business could expense up to $500,000 the year the GHP was installed. Under the bonus depreciation provision, a business could deduct 50 percent of the cost of a GHP in the first year of installation.”
In July, the House passed HR 4718 to make permanent an extension of 50 percent additional first year depreciation (bonus depreciation) for a variety of “qualified property,” including GHPs. Last April, the Senate Finance Committee passed by voice vote the “Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act,” which would extend a number of energy related tax breaks, including an extension of expired Section 179 expensing and bonus depreciation incentives through 2015. Tax extenders will not be considered by the Senate until after mid-term elections next month.
GEO successfully ensured that the following provisions that impact tax deductions for geothermal heat pump installations were included in the Senate legislation:
• Bonus Depreciation — Taxpayers are allowed an additional first-year depreciation deduction of 50 percent (bonus depreciation) of commercial GHP equipment that is placed into service after Dec. 31, 2013 but before Jan. 1, 2016.
• Business-Related Expensing — A taxpayer may deduct up to $500,000 per year — indexed for inflation — for GHP equipment and other property used in a trade or business during calendar years 2014 and 2015.
• Energy Efficient Homes — A contractor may take a credit for each new energy-efficient home used as a residence in calendar years 2014 and 2015. Homes must meet a reduction in annual heating and cooling energy consumption compared to a comparable residence constructed in accordance with standards of the 2006 International Energy Conservation Code. The credit is $1,000 for new homes that meet a 30 percent reduction in annual heating and cooling energy consumption, and $2,000 for new homes that meet a 50 percent reduction in annual heating and cooling energy consumption.
• Energy Efficient Commercial Buildings — The energy efficient commercial building deduction (section 179D) is extended for calendar years 2014 and 2015. A building owner will be allowed a deduction for equipment installed in 2014 and 2015 as part of a plan to reduce total annual energy and power costs of a building with respect to interior lighting systems; HVAC; and hot water systems by 50 percent or more compared to a building that meets the minimum requirements for energy-efficient commercial building expenditures under ASHRAE/Illuminating Engineering Society of North America (IESNA) Standards 90.1-2001 in 2014 and 90.1-2007 in 2015. The deduction is $1.80 per square foot of property for which the expenditures were made. The deduction is allowed in the year the property is placed into service. Tribal governments and nonprofit organizations can allocate the deduction to the person primarily responsible for designing a property.
As noted, tax extenders will not be considered by the Senate until the lame duck session after mid-term elections in early November. GEO said it is likely that the Senate will pass a two-year extension through the end of 2015 (retroactive to the expiration date of the incentives at the end of 2013). In early September, Senate Majority Leader Harry Reid (D-Nevada) said that allowing lapsed tax incentives (including Section 179 provisions for bonus depreciation) “is not an option,” vowing to bring them to the Senate floor for a vote by the end of 2014.
According to Energy Star, tax credits set to expire in 2016 include:
- Residential Geothermal heat pumps
- Residential Wind Turbines
- Residential Solar Power and Water Heating
- Residential Fuel Cells
Read more about tax credits and rebates for energy efficient products.
Companies: Solar Energy Industries Association