December 1st, 2017 by Chris Orange
With the GOP Tax Bill taking shape over the past weeks, advocates across an array of industries have been fighting hard. Some have perused their interests on the offensive, trying to tap into the administration’s appetite for a radical overhaul, and others on the defensive fighting to maintain existing benefits. For advocates and trade groups representing the solar and wind energy sectors, the latter has taken hold.
Whilst the Trump administration’s preference for fossil fuels and nuclear power has been no secret, initial House and Senate versions of the tax reform bill saw the solar industry breathe a sigh of relief. There appeared to be no provisions to change the step-down of the U.S. solar Investment Tax Credit (ITC) for Solar Substantially. However within the detail of the Senate bill, a provision called Base Erosion Anti- Abuse Tax (BEAT) has caused alarm for those in the industry, with advocates arguing that money for wind and solar power projects could dry up if Congress doesn’t alter its language in the tax bill that is designed to prevent banks from moving their profits aboard. The Washington Post reported earlier this week that the problem has come in that ‘the formula for calculating multinationals under that new tax sweeps up the wind and solar credits too’.
The BEAT tax could see an additional dollar of tax levied for every dollar earned through a wind or solar credit. Solar and wind representatives in the Capitol have fought back against the proposals, a letter sent by key industry players including the American Wind Energy Association, the Solar Energy Industries Association and ACORE has urged senators to provide them with exemptions. The urgency of appeals was expressed by Peter L. Kelley, Vice President of public affairs at the American Wind Energy Association who stated that ‘plans could potentially ‘kill over half the wind projects in America, cause factory layoffs and break construction contracts already signed, and deprive farming communities of a cash crop they’re counting on’. Not only do those in the industry fear a drying up of investment, but organizations have also noted that BEAT provisions would apply retroactively to tax credits on operating as well as new projects, leading to fears of a mass sell-off that would flood the marketplace and further damage tax equity markets. Whilst lobbying efforts have achieved a degree of support from a number of GOP senators representing wind-swept states such as Iowa, Nevada and South Dakota, it remains unclear what the final implications will look like for the industry. If changes fail to be made to the initial bill, advocates are viewing the ‘manager’s amendments’ as the next route to exemption, as part of a number of amendments presented by Senate Finance Committee Chair Orrin Hatch, to be voted on as a bundle.