While the Senate finalizes the plans to vote on its revisions of the Omnibus expenditure bill, the renewable energies sector knows that its tax credits to build clean energy projects will be faster, but perhaps not as orienting as draconian provisions in the version of the “Big, beautiful bill”.
What remains uncertain are the details and if “poisoned pills” of the version of the chamber could always find their way in the final legislation which could considerably limit the materials of the supply chain or prevent small developers from participating in tax credits.
All this occurs when the United States needs more power of all the necessary means to ensure an increase in “unprecedented” electricity demand for the first time in decades, driven largely by the boom of the construction of the data center at Power IA and more, said CEO of Exelon, Calvin Butler. Butler chairs the Edison Electric Institute representing electrical public services belonging to national investors and its EXELON company is n ° 192 on fortune 500.
“We believe the [clean energy] Tax credits are essential, “said Butler Fortune In an interview on June 26. “We do not believe that you can access the [U.S.] Energy dominance without having renewable energies as part of the solution. This is the approach of all that is. »»
Butler said that the Association of Public Services is “ready for the version of the Senate of the bill, even if the tax credits would be ideally extended longer. “We are going to take what we can get,” he added. “We are optimistic, but in addition.”
A large part of the GOP has sought to speed up oil and gas to the detriment of renewable energies. Currently, the legislation is threatened by the GOP’s intestine struggles and a parliamentary decision of the Senate against tax changes to Medicaid. The law on the reduction of inflation decreases desired by a large part of the GOP is only a small part of the heavy invoice.
The provisions concerning the provisions concerning both the “transferability” of tax credits – are considered as necessary by smaller and medium -sized developers to take off many projects and “foreign concern” (FEOC). The FEOC rules, which applied only to tax credits on electric vehicles at IRA, now apply to all clean energy tax credits, which essentially limits the necessary supply chain materials from China.
The transferability, which is restored in the Senate bill for the moment, allows small developers to raise capital by transferring tax credits to a discount to larger buyers with greater tax liability which can immediately take advantage of the tax advantages. The elimination of transferability would harm small developers who need an additional option to increase capital.
The version of the house of transferability focused on Bill after 2027, has placed strict Feoc rules on all tax credits, removed with EV and residential solar tax credits, and required that new public energy service projects should innovate within 60 days of the signature of the bill and put into service by the end of 2028, an impossibility for many hundred projects planned.
The version of the pending Senate restores transferability, maintains more lenient and progressive Feoc rules on all tax credits and allow clean energy projects to start until the end of 2027, which is potentially ending after the Presidency of President Trump. The solar tax and residential tax credits remain in danger.
“We believe that transferability is essential for significant development and growth in renewable energies,” said Butler.
What comes then
For us, Solar Developer Avantus, the CEO Cliff Graham said that maintaining transferability is essential to industry.
“If the transferability disappears, it is a kind of stolen door residence to close the IRA,” said Graham, who is currently developing solar projects in California, Nevada and Arizona.
If transferability is maintained, irony is the drop in tax credits will accelerate wind and solar construction projects, he said. “We are in the queue. We are already there. We can deploy in 18 months. [hyperscalers]. “”
“You are going to have an artificial jostling of all these people trying to get their [renewable] Projects in time, “said Graham, which will trigger supply chain shortages.” The equipment will become even more expensive. “”
Roman Kramarchuk, responsible for the climate market and analysis of policies for S&P Global Community Insights, said that he thought that the rules of foreign concerns could prove the “poisoned pill” more problematic for renewable industry, although the senatorial version is again less expensive.
The largest point of pain is the storage of battery on the scale of public services because China has an almost monopoly of most of the components of the battery.
“It is really difficult to imagine doing storage equipment without having elements of battery cells or modules leaving China,” said Kramarchuk. The Feoc rules are the “hidden piece” of the legislation which “could really suffocate the absorption and use of tax credits”. The “clearer definitions” of the Senate version are at least easier to manage than the strict and waves rules in the Bill of the Chamber.
Instead of a total ban on Chinese materials, the rules of the FEOC Senate reduce the restrictions of the supply chain, allowing promoters to reduce their materials from China each year according to a fixed schedule.
As Graham has said, the objective is always to use American materials, but there is not yet enough national manufacturing and, even in the event of a case, they will always have to get their supplies from many materials from China and elsewhere.
“We want to use as much domestic content as possible. It is simply not enough today to be able to do when you have to do,” said Graham.
