Renewable energy roundtable: Production and investment tax policy to be a top priority in 2015

Tulsa, OK -- The renewable energy industry has come a long way in relatively little time. The costs of renewable technologies continue to go down, while renewable capacities at many utilities continue to go up. Although, in many cases, renewable technology is mature and ready for utility-scale deployment, state and federal production and investment tax policies appear less evolved.

Such were the topics on the minds of the participants in this year's renewable roundtable, when Power Engineering talked with five renewable energy executives as they prepared to take on a new year in the industry. Joining the conversation were: David Blittersdorf, Chief Executive Officer, AllEarth Renewables; Karl Gawell, Executive Director, Geothermal Energy Association; Tom Kimbis, Vice President of Executive Affairs, Solar Energy Industries Association (SEIA); Derek Stilwell, Director of Sales and Tendering in North America, Alstom Wind; and Emily Williams; Manager of Industry Data & Analysis, American Wind Energy Association (AWEA).

PE: What policies and/or regulations are going to most impact the renewable energy industry in 2015?

Kimbis: I'll start off by stating the obvious; tax policy continues to be what drives a lot of the energy development in the United States. Over the last century, energy policy has essentially been driven by tax incentives. The Investment Tax Credit (ITC) is expiring soon. That's a 30-percent tax credit that permanently drops to 10 percent at the end of 2016. The scheduled end of that credit is beginning to cause serious repercussions in the solar industry. We see large-scale projects beginning to have difficulty securing funding without more assurance that the ITC will be around. We are strongly supportive of extending the ITC.

Stilwell: Yes, the continued effects of this stop-and-go approach to policy has already resulted in considerable consolidation up and down the chain in the wind sector of the industry, meaning that a concentration of powerful financiers and developers has virtually obliterated the smaller developers, which are now being absorbed by the larger developers. The long-term result of this consolidation is a market that doesn't compete freely and openly. It will eventually result in decreased competition in the market and a rise in prices for everyone.

Williams: All forms of energy need predictable, stable, pro-growth tax policy. While we determine energy policy for the tax code, we need policies that we can count on. The U.S. Senate finally passed a one-year extension of the Production Tax Credit (PTC) and ITC for wind power. Congress, then, has basically given the wind industry two weeks to start construction on projects. There are construction companies, developers, sales people, and lawyers that have had their holiday plans put on pause as they try to figure out how to creatively take advantage of this extension. This is no way to do business, and it is not smart policy. Short-term extensions do not keep developers in business, and they do not convince companies to make investments in research and development that will ultimately bring down costs.

Kimbis: Too often we have discussions within the energy community about where financiers are going to put their money. We ask ourselves, if they're not going to put money into wind and solar, are they going to shift it over to natural gas or something else? I think the folks who focus on energy-related policy need to realize more broadly that most financiers can put their money anywhere they like. Renewables aren't just competing against fossil fuel investments; they're also competing against infrastructure developments in other countries, and against anything that yields a better return on investment for the financier. It's the stability, predictability, and transparency of the policy that invites investment. These technologies are not Republican or Democrat; they are energy-producing technologies that are great investments for the United States. The reasons the policies were put in place to begin with were to diversify our energy supply, increase national security, and help the environment, and these are bipartisan objectives. We need to get away from thinking that certain technologies fit into one party or another, and realize that they benefit everyone.

Gawell: And it's not just wind and solar that are affected by these things. Geothermal is also caught up in the lapse of the PTC, and so too are hydropower and biomass. The renewable industries at large are capital investment-intensive industries, so tax credits have a tremendous impact on where people choose to invest their money. The lapse in the tax credits is very destructive to not only growth in these industries, but also to the advancement of technology and the creation of jobs. Let's hope the future congress will make these issues a priority.

Blittersdorf: Because of the problems with our policy, a two-week extension of the PTC doesn't accomplish anything. I have a background in both wind and solar, so I get to play in the solar industry while the wind industry tries to figure out if it's going to have any policy to support it. But it is still really troublesome because of where the tax equity investors are going, and because of how scared they become in the absence of good policy at the federal level. It is problematic that we don't have a coherent energy policy at the federal level. The all-of-the-above strategy does not work; it's a failure. We must find some leadership in renewables for the United States.

http://www.renewableenergyworld.com/rea/news/article/2015/02/renewable-energy-roundtable-production-and-investment-tax-policy-to-be-a-top-priority-in-2015