Here comes the fight over the sun. Specifically, tax credits for solar energy.
The tax credit for solar investment is set to shrink after 2016. That has solar companies, environmental groups and Democrats working on securing a lifeline for the incentive, as supporters feel the technology just needs one last, multi-year boost to achieve grid parity with other forms of energy.
“We’re not asking for permanence. We’re not asking for a 10-year extension. We’re just asking for a little more time,” Ken Johnson, a spokesman with the Solar Energy Industries Association, told the Washington Examiner.
The investment tax credit was last extended in 2008 and it underpins a third-party financing model that has allowed solar to boom in the United States. Companies snag the federal credit, with state and local incentives, to set up panels on houses. In return, customers owe power fees to the installer under a multi-year contract.
Johnson brought several of his group’s Southeast members to Capitol Hill on Wednesday to lobby lawmakers on extending the credit, which would drop from 30 percent to 10 percent. He said Republicans are starting to warm to the credit, though many conservatives are philosophically opposed to a subsidy, making getting support “a challenge.” Letting the credit end would put 80 to 85 percent of small solar firms out of business, Johnson said.
The price of solar panels is also coming down. Energy Secretary Ernest Moniz said at a Washington event this month that solar prices fell 76 percent between 2009 and 2013, which the White House and solar proponents contend means policies are working. But conservatives and even some solar companies argue falling prices are a reason to either reduce or let the incentive die.
What makes solar advocates’ case easier is that Congress is unlikely to consider it alone.
The House Ways and Means Committee is passing several large tax extensions individually, but they only nibble at the roughly 80 so-called “extenders.” That would model a deal then-Senate Majority Leader Harry Reid, D-Nev., had brokered with the committee’s former chairman, retired Rep. Dave Camp of Michigan, before the White House and then-Senate Finance Committee Chairman Ron Wyden, D-Ore., combined to block the effort.
While the panel’s Republicans aren’t keen on the solar credit, it isn’t a big-ticket item.
“[W]e have not made a decision how to handle this one, but we generally do not like using the tax code to provide benefits to specific industries,” spokesman Brendan Buck told the Examiner in an email.
The solar credit isn’t as controversial as many other extenders, said Ryan Ellis, tax policy adviser with Americans for Tax Reform, which opposes the credit.
“No one is talking about making it permanent, and very few people are talking about letting it expire,” Ellis told the Examiner.
The Senate, meanwhile, doesn’t have the time to debate individual tax extensions because it’s loaded with spending bills, a highway funding bill and Export-Import Bank reauthorization, among other measures. The Finance Committee is wrapping up “working groups” on specific tax areas by the end of July that could yield broad legislation. But the panel has been consumed with controversial trade legislation.
That increases the likelihood that at least some larger legislative packages might be combined at the end of the year. In the past that has involved tax extenders, given their Dec. 31 expiration dates. The broad extenders package that has become routine in Congress boosts the odds of passage because it broadens the number of disparate groups that want to see their policies passed.
That’s what happened in January 2013. Extenders had expired for a day after Congress missed its deadline to avert the “fiscal cliff,” and Senate Democrats slipped a wide-ranging tax extenders bill into legislation to avoid ending tax cuts enacted under former President George W. Bush and spending cuts imposed by the Budget Control Act.
“The problem is at this point here in late June you’ve got seven or eight or nine plans flying around in the air,” Ellis said. “Any combination of those could or could not come together at some time later this year. And it’s totally impossible to know which of these could link up and become law.”
