We recently shared analyses by Wood Mackenzie and various industry associations about the pandemic’s impact on our nation’s transition to clean energy. In short, all energy sectors, including renewables, have been hit hard and will need significant time to recover. Their immediate need is revenue streams to keep their workforce and supply chains operational when financing has dried up.
The question for lawmakers is how to achieve this and to hasten the overall economic recovery with specific policy solutions. Certainly, a number of measures could be added to upcoming stimulus packages, or they could be passed à la carte. Many small businesses operate in these sectors and have received some support from the third stimulus package, and Congress should double down on economy-wide solutions that help them.
Furthermore, most of the significant renewable energy associations have published briefs detailing policy relief recommendations, including the Solar Energy Industries Association (SEIA), the American Wind Energy Association (AWEA), and the Energy Storage Association (ESA). It is worth reading each of the briefs individually for industry-specific context, but for the most part, the recommendations are closely aligned.
Here are the top recommendations to help energy companies through the pandemic and economic crisis until the market starts working again:
1.) Investment Tax Credit (ITC)/Production Tax Credit (PTC) Direct Pay
These tax credits have proven to be one of the most cost-effective and impactful tax policies in a generation, accelerating the adoption of renewable technologies and delivering excellent returns on government investments. A program is needed to provide a choice between utilizing the existing tax credit or accessing direct cash payments. This is important because many developers are facing new challenges securing financing amid the pandemic. Companies need the flexibility of being able to turn them into cash so they can continue to operate. Additionally, the phasedown of these credits should be delayed, given that progress on many projects will be set back several months.
2.) Adjust Safe Harbor Guidelines
Similarly, projects that have been halted need adjusted deadlines. The ITC and PTC are subject to what are known as “safe harbor” provisions under the Internal Revenue Service guidance, which means developers hoping to earn the tax credits must demonstrate continuous work or continuous efforts from the time construction starts, and have projects placed in service within four years. Obviously, COVID-19 has disrupted many of those efforts, so the industries are asking for modifications to safe harbor language.
3.) Permitting Reforms
At a time when the economy needs to be jumpstarted, savvy policy reforms are needed to streamline regulatory processes that are normally built into planning for any number of energy projects. SEIA, for instance, is calling for local jurisdictions to be empowered to conduct solar permitting remotely. The Department of Energy’s Solar Automated Permit Processing (SolarAPP) program, for example, empowers Authorities Having Jurisdiction (AHJs) to conduct permitting electronically and inspect solar installations remotely.
4.) Continued Investment in Research and Development
This would ensure that financial assistance, grants, and other investments continue to fully fund research and development and demonstration projects for distributed energy resources for resilience and cost-savings.
5.) Infrastructure
Some in Congress have called for a stimulus package to be focused on infrastructure, including strengthening the electric grid. This could include reviving the American Energy Innovation Act (AIEA), a package of more than 50 individual energy bills that had strong bipartisan support but stalled in March due to a procedural vote. It would represent the first comprehensive energy legislation in more than 12 years. It includes measures that would support energy efficiency, renewable energy, energy storage, carbon capture, advanced nuclear, mineral security, cyber and grid security and modernization, and workforce development. And there is no doubt it would be a significant job creator and help accelerate our nation’s energy transition.
In the meantime, we must be mindful that Americans are hurting: E2 (Environmental Entrepreneurs), the American Council on Renewable Energy (ACORE), E4TheFuture, and the BW Research Partnership recently released an analysis of Department of Labor data, reporting that:
106,472 workers in clean energy occupations filed for unemployment benefits last month, wiping out all 2019 clean energy job gains across renewable energy, energy efficiency, clean vehicles, energy storage and clean fuels. These include electricians, HVAC and mechanical trades technicians and construction workers who work in energy efficiency; solar installers; wind industry engineers and technicians; and manufacturing workers employed by electric and other clean- vehicle manufacturing companies and suppliers.
Congress must act quickly to assist American energy workers. Any or all of the measures listed above would be a good start.