Some wind and solar energy developers are skeptical of reviving incentives Republicans phased out last year.
Democratic leaders have pledged to restore wind and solar tax credits if they regain control of Congress and the White House, but some renewable energy developers say the industry may no longer need — or even want — the subsidies.
Republicans last year accelerated the phase-out of investment and production credits that Democrats supercharged in their 2022 climate law within the Inflation Reduction Act. The credits’ return is now central to the Democrats’ comeback plan.
Senate Minority Leader Chuck Schumer (D-N.Y.) said reinstating the incentives will be “one of the very first things I will do when we retake the majority.” House Minority Leader Hakeem Jeffries (D-N.Y.) has made a similar vow. Even some moderate Republicans have expressed support.
But as the wind and solar credits begin to go away, some developers wonder whether continuing to pursue the incentives is necessary or politically wise.
“We’re at a point now where the tax credits have done a great job of launching the industry, but they do need to be phased out, because we’re a mature industry now,” said Ty Daul, CEO of Primergy Solar, a major U.S. utility-scale developer.
Daul said a “large percentage” of industry players agree, arguing that renewables are now mature and cost-competitive. He and others also point to the complexity of managing the credits as a reason from moving away.
“I don’t know if there’s another country that uses tax credits instead of other sorts of feed-in tariffs, but I’d love to see this country move off of tax credits,” said Frank Burkhartsmeyer, CFO of battery company GridStor, during a forum hosted by the American Council on Renewable Energy. “I don’t find it a particularly convenient way to finance industrial policy.”
Not all renewable energy developers are on the same page. Kevin Smith, CEO of Cypress Creek Energy, which focuses on solar and storage projects, sees credits as an affordability policy.
“Do we need the tax credits to stay competitive? No, we don’t,” said Smith. “Do [lawmakers] want to take away tax credits and raise everybody’s electricity bills? Doesn’t seem like a great idea to me. So it’s really an affordability issue on tax credits.”
The debate is beginning to spill onto Capitol Hill, where some Democrats are questioning whether restoring wind and solar tax benefits should be a top policy priority.
When asked whether Democrats would fight to bring back the incentives, Senate Energy and Natural Resources ranking member Martin Heinrich (D-N.M.) said “stay tuned.”
He said political capital could be better spent on harder-to-decarbonize sectors that have low clean energy penetration, like transportation and heavy industry, instead of wind and solar projects that are already being added at record levels to the grid.
“I think something like 94 percent of all power additions were wind, solar and batteries,” Heinrich said. “We need to decarbonize transportation and the industry, and so it may be that incentives or tax credits or something else [for those sectors] might be a better use of those dollars.”
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