Utlity Drive: Murkowski questions need for renewables tax credits

Dive Brief:

  • Phasing out the Production Tax Credit (PTC) and Investment Tax Credit (ITC) for wind and solar generation could lead to "regional disparities" in adopting renewables and leave best available technologies behind, industry experts told the U.S. Senate Committee on Energy and Natural Resources on Tuesday.
  • Chairwoman Sen. Lisa Murkowski, R-Alaska, questioned whether the credits are still necessary as many renewable technologies are "standing on their own now." The solar credit begins to phase down next year, while wind incentive will begin to phase out in 2021.
  • The hearing also touched on tax policy, grid integration, education and cybersecurity, which the director of the National Renewable Energy Laboratory (NREL) said "keeps me up at night."

Dive Insight:

Murkowski doesn't sit on the Senate Finance Committee, where a bipartisan measure to extend energy tax credits is being considered. But, she told the Energy Committee on Tuesday, she gets plenty of questions from the media on the credits, so she posed the question to panelists.

"Are we beyond the time when wind and solar — that have enjoyed the benefits of these tax credits for these many years — no longer need them?" Murkowski asked. "We had a deal, we were phasing things out, but now there is a lot of discussion."

"I think these tax incentives are invaluable," Jason Hartke, president of the Alliance to Save Energy, said before Murkowski cut him off.

"Well, they have been invaluable — the question for us as policy makers is how long do you extend them? How long do you give them that advantage?" Murkowski asked.

Hartke said the question has to be asked "in the context of the threat of climate change, which means we need to move a lot faster."

Incentives drive clean energy technologies that would otherwise be left behind into the mainstream market, he said.

"Best available technologies often do sit on the shelf, they don't commercialize as easy as we think, because of various market barriers, particularly with energy efficiency," Hartke said. "Tax incentives make a big difference."

And phasing out solar credits could lead to regional disparities in adoption, as prices are declining on a state by state basis, said Dan Conant, president of West Virgina-based Solar Holler.

"I would be in favor of extending [the tax credit] just to give us more time to make sure solar is reaching everyone across the country, and not just the coasts," Conant told the Senate committee.

The solar ITC is set to phase down from 30% in 2019 to 26% for projects that start in 2020, 22% in 2021 and 10% for all commercial and utility projects that start thereafter. The PTC begins to phase out in 2021, declining to 80%, then 60% in 2022, and so on.

DOE wavered in its stance on the credits.

"I do not know if the administration has a position on ITC and PTC, so I don't want to touch that," said Daniel Simmons, assistant secretary for the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy. But he added, the credits "definitely help the deployment of the resources that utilize them."

"When do we have a level playing field? That I can't really answer," Simmons said. "In my office we're focused on driving down the cost of renewables and then letting the market take it from there."

Cybersecurity a top concern

Cybersecurity concerns were raised multiple times, with Martin Keller, director of NREL, saying he loses sleep over the issue.

"When people ask what keeps me up at night, this is it," Keller said. He warned that as connected, distributed energy technology deployment increases, "so does the number of access points for potential cyber threats."

Keller also said that while the United States' grid security is "pretty good right now," the future will look very different.

The growth of autonomous operations on the electric grid means "the future of the grid will be driven by machine learning." While that can help keep the lights on, it "will also bring new threats to the grid."

DOE has been taking steps to secure the grid, and in March announced up to $70 million for a new Clean Energy Manufacturing Innovation Institute that would be focused on addressing cyber threats.

According to Simmons, DOE has estimated that the adoption of automated controls and sensors provide the potential for up to 15% improved energy efficiency in manufacturing, but he added that the new technologies "introduce cybersecurity risks, which can limit their adoption."

By:  Robert Walton
Source: Utility Drive