US House Reconciles Legislation That Handicaps Renewable Energy Projects
The Republican controlled House of Representatives passed reconciliation legislation that effectively will eliminate nearly every renewable energy incentive that is currently in place.
The bill will end the 30 percent residential solar investment tax credit by the end of this year and the applicability of residential solar leases for tax credits.
The Investment Tax Credit (ITC) and the Production Tax Credit (PTC) for commercial and utility scale projects would go away completely for any project not placed in service by the end of 2028.
There are a couple of poison pill provisions put into this legislation that are designed to prevent any renewable energy projects from moving forward.
Republican House members added a 60-day start provision considered impossible to meet. It essentially takes 12-18 months to get permitting in order to begin a project of commercial or utility size.
It is anticipated that it will kill all renewable energy projects except those already under construction.
The bill also introduces new restrictions on taxpayer eligibility for tax credits if they use components or sub-components manufactured by what's known as an FEOC or a Foreign Entity of Concern.
Most industry insiders feel that this provision effectively disqualifies any solar installation.
The use of any item that incorporates Chinese-made components or sub-components, would be disqualified from receiving tax credits. The vast majority of the solar equipment available in the US market is foreign made.
The budget process moves to the Senate for consideration.
CA State Assembly Breaches Existing Solar Transfer Agreements
A committee in the California State Assembly has passed a bill that severely reduces a solar project owner's net metering compensation when the property is sold. In 2021, California passed NEM 3.0, which reduced net metering compensation by about 75 percent.
Those with existing net metering contracts were grandfathered under that legislation or allowed to keep their better contract for up to 20 years.
Under current California utility law, solar projects that are transferred to a new property owner can keep the original net metering contract until that contract expires.
Under this new proposal, if a property that includes a solar array is transferred to another owner, then the current net metering agreements are considered null and void.
The newer reduced net metering 3.0 provisions would go into effect.
After passing the assembly appropriations committee, this bill is expected to appear again at the California State Assembly floor this week for further deliberation.
US Electricity Demand is Insatiable
Analysts project the electricity demand in the United States will grow by about 25 percent by 2030 and 78 percent by 2050. According to a new report from a global consulting firm Inner City Fund (ICF), the forecast marks a sharp increase from historical trends and projections from 2024.
The report cited artificial intelligence, cloud services, cryptocurrency mining, as key drivers behind demand rise, along with expanded use of electric vehicles, building electrification, and the growth of data centers.
If substantial new generation capacity is not added and added quickly, the ICF modeling suggests that the U.S. will face significant power shortfalls by as early as 2028.
Tariffs and More Tariffs
Additional US tariffs will be imposed on solar panel imports from Cambodia, Malaysia, Thailand, and Vietnam.
The U.S. International Trade Commission voted that the domestic solar industry is materially injured by the availability of solar panels from those nations.
This finding follows a U.S. Commerce Department's April 2024 determination in an anti-dumping and countervailing duty investigation into solar imports from these four Southeast Asian countries.
This finding resulted in additional tariffs proposed of over 3,400 percent on some imported panels.
In 2024, approximately 80 percent of the solar panels installed in the U.S. were imported, and of these, 81 percent were imported from these four specific Southeast Asian nations.
In anticipation of increased tariffs, imports from these nations have fallen off dramatically in recent months following the ITC's finding. The Commerce Department is expected to issue new orders on June 9th and update the tariff rates for the four countries.
These tariffs will impact crystalline and silicon photovoltaic cells, whether or not they're assembled into modules imported from the four countries.
