On May 5, 2016, the Internal Revenue Service (IRS) issued favorable updated guidance on Production Tax Credit (PTC) implementation issues following last December’s multi-year extension by Congress. In December, 2015, Congress extended the PTC through 2019 with a 20% step-down in value each year from 2017 through 2019, after which the credit phases out. This extension is expected to drive the deployment of 19 gigawatts of additional wind capacity by 2021.
Key features of this updated guidance include:
Summary of the Environmental Protection Agency’s Clean Power Plan, Emissions Trading and Clean Energy Incentive Program
The Environmental Protection Agency’s (EPA) Clean Power Plan (CPP) sets state-specific CO2 emission reduction standards on existing fossil-fuel generating units (EGUs) to be achieved by 2030. The final CPP sets uniform national standards for EGUs based on averaging the emissions rates within the three interconnections (Eastern, Western and Texas) and sets performance standards for EGUs based on the “best system of emission reduction,” or BSER, Building Blocks 1-3. Building Blocks 1 and 2 account for efficiency improvements and increased dispatch (peaking) of existing power plants. Building Block 3 accounts for new renewable generation and estimates total penetration of domestic renewable capacity at 28% by 2030.
On March 17, the American Council On Renewable Energy (ACORE) hosted its annual Renewable Energy Policy Forum, where speakers and attendees came to a broad consensus that consistent policy is the missing link in the national renewable energy playing field. Industry leaders noted that many had looked to the Clean Power Plan (CPP) as a source for political guidance. However, now that the climate rule has been put on hold, uncertainty remains. Senator Ron Wyden (D-OR) affirmed that the recent tax extenders for wind and solar will allow for the renewable industry to strategically prepare for upcoming years. But in order to achieve a more stable tableau for all renewables, Congress must agree on comprehensive tax reform – the Senator called the current tax code “a rotting dead carcass” and a “monument to yesteryear.” Business leaders also agreed that even negative consistent policy is preferable to inconsistency – and long-term consistent policy is not yet part of the American play book.