Analysts expect final GOP tax bill will throttle renewable energy

Host: Ronald Bethea

Dive Brief:

Last minute changes to the Senate tax cut bill passed on Friday could have a negative effect on the growth of renewable energy projects, industry analysts confirmed to Utility Dive Monday.  

The Senate bill passed with little change to a base corporate tax provision that would make tax credits, a mainstay of renewable energy financing, less valuable. The bill passed by the Senate also included the last-minute incorporation of a minimum corporate tax that analysts say also could limit the growth of renewable energy.

The Senate bill now goes to conference where differences with the House tax cut bill passed last month will need to be resolved. At least some of the provisions harmful to clean energy are expected to survive the conference, analysts said.

In a last minute markup on Thanksgiving eve, the Senate finance committee inserted the Base Erosion Anti-Abuse Tax (BEAT) provision. The aim of the provision is to make it harder for corporations to dodge taxes by backing out tax credits from the calculations used to determine tax rates.

The BEAT provision would make the production tax credit (PTC) favored by wind power developers and the investment tax credit (ITC) used for solar power projects less appealing to the multi-national corporations that dominate the tax equity market. That would create uncertainty in the market for financing many renewable energy deals.

Four trade organizations – the American Council on Renewable Energy, the American Wind Energy Association, Citizens for Responsible Energy Solutions, and the Solar Energy Industries Association – responded with a letter last week urging the Senate to create a carve-out for renewable energy.