A group of bipartisan senators on Thursday asked the Department of Treasury to extend safe harbor deadlines to ensure renewable energy developers are able to secure the tax credits they need to finance their projects.
In order to qualify for the production tax credit (PTC) or the investment tax credit (ITC), project developers have to meet certain construction deadlines, but many in the industry are seeing lengthy project delays as a result of supply chain disruptions, workforce shortages and other COVID-19-related setbacks.
Renewables advocates have been asking Congress to extend these provisions for weeks, citing the loss of potentially billions of dollars in investments if these projects are not able to proceed.
Extending safe harbor deadlines should come at no cost to the federal government, clean energy advocates argue, as these credits have already been included in the federal budget and it is assumed that money will be spent.
Senators including the majority and minority leadership of the Energy and Natural Resources Committee wrote to Treasury Secretary Steve Mnuchin arguing the clean energy sector’s case, proposing the safe harbor deadlines for the PTC and ITC be extended from four to five years for projects that began construction in 2016 or 2017.
"This modest adjustment to the PTC and ITC guidance would help preserve tens of thousands of jobs and billions of dollars in investments and provide some certainty in these challenging times," the senators wrote. The six who signed the letter were Chair Lisa Murkowski, R-Alaska, Ranking Member Joe Manchin, D-W.Va., Sens. Ron Wyden, D-Ore., Charles Grassley, R-Iowa, John Thune, R-S.D., and Maria Cantwell, D-Wash.
The safe harbor deadline could either be extended by the Department of Treasury or through Congress. It's one of two big asks the renewables industry has for the federal government — wind and solar leadership have also asked Congress to consider making the tax credit direct pay or refundable.
“We will continue working with Congress and other renewable energy leaders to find solutions to the specific challenges COVID-19 is causing our members," American Wind Energy Association (AWEA) CEO Tom Kiernan said in a statement.
AWEA estimates COVID-19-related delays have put 25 GW or $35 billion in wind projects investments at risk, along with 35,000 jobs.
The Solar Energy Industries Association says the solar sector could lose half its 250,000 workers and billions of dollars in solar project investments as a result of the economic shutdown caused by COVID-19. The solar ITC will not phase fully out until 2022, however, and Thursday's letter largely applies to tax credits for wind.
"Relief provisions ensuring renewable projects can secure financing and meet safe harbor continuity schedules are critical to preserving a strong domestic clean energy sector," said Kiernan. "Making these adjustments would provide the industry the flexibility needed to accommodate COVID-19 delays, without costing the Federal government any additional money."
This post has been updated to note the extension would apply largely to wind projects that utilized the PTC or the ITC election.