US extends renewable energy tax credits

The US renewable energy industry has benefited from a largely unexpected extension to tax relief announced by US Congress at the end of 2015.

The Production Tax Credit for wind power has been extended to 2019 and the Investment Tax Credit for solar has been extended to 2022. However, the amount of credits available will be stepped down over these periods to account for the falling costs of renewable energy technologies.

The US Congressional Joint Committee on Taxation said that the agreement would result in $14.5bn in tax credits reaching wind developers and $9.3bn reaching solar developers to 2025. Bloomberg New Energy Finance has estimated that the extensions could result in around $73bn in added investment for US wind and solar between 2016 and 2021. It also estimates that over the same time period wind capacity additions would reach 44 GW, compared to 25 GW without the extension; and solar would reach 59 GW, against 41 GW with no extension.

The move was largely welcomed by the US renewables industry that has got used to stop-start cycles from Congress deciding whether to extend the credits at the end of a given year. But some criticised the concessions to the US oil industry that were also announced, reportedly to secure political agreement for the deal.

The US Solar Energy Industries Association says the tax credits will attract $40bn in solar investment over the next four years and double the number of jobs in the industry to 420,000. It says the move could also help to reduce the costs of solar power by 40% over the same period.

The American Wind Energy Association said that the deal helped secure stability for 73,000 American wind industry workers across all 50 States, as well as for private investors helping to grow wind power in the US.

It is thought that tax credit relief will be extended to other renewable technologies in the US early this year.

Photo: Siemens