Geothermal Energy Weekly’s leading news

The Geothermal Energy Association brings you Geothermal Energy Weekly’s Graph of the Week, a look at federal incentives, and other geo energy news from around the world.

Graph of the Week: Map Peeks Behind the Scenes of California’s Geothermal Goals

saltonsearesource
Source: Salton Sea Authority

Above: The announcement this year that the Imperial Irrigation District in California has plans to develop 1,700 MW of geo power at the Salton Sea was welcomed by the geothermal industry. “This is exciting news for the geo power industry,” said GEA’s Ben Matek. “The new announcement and others in Nevada and Hawaii could give new life to the U.S. geo power industry.” Our Graph of the Week is an annotated map graphic showing 2,330 MW of geo power reserves at the Salton Sea, enough to power over 2 million homes. Even a decade ago these resources had been proven to be available and could be produced using existing technology and prevailing market conditions.

Industry Awaits Congressional Action on the Federal Tax Incentives that Helped New Renewable Projects in 2013
International Geo Development in 2014 Gets Shot in Arm from World Bank
Reid, Heller Release Discussion Draft On Greater Sage Grouse in Nevada

Industry Awaits Congressional Action on the Federal Tax Incentives that Helped New Renewable Projects in 2013
By Karl Gawell, GEA Executive Director ~ As 2013 began, Congress extended the qualification date for wind energy projects for the Production Tax Credit (PTC) for one year, matching the expiration date for most other renewable technologies. This means these last days of 2013 have been the last days to qualify for the PTC credit, not only for wind, but also for geothermal. At the same time Congress failed to extend the credit for technologies other than wind, but they did make one major change that benefited all renewable technologies: they changed legislative language so that projects were required to be under construction, rather than in production, in order to qualify.

This approach reduces the end-of-year cliff for new projects and eliminates a hard and artificial deadline for project completion, meaning there is no need for projects to power up by midnight tonight. As long as they are under construction, geothermal projects will qualify for the PTC once they do bring power to the grid.

But the headlines today are focusing on tonight’s expiration of the wind tax credit. Wind, like geothermal, biomass, and hydropower will all face a drop-off in new projects without congressional action, and when Congress returns in January it faces the question of what to do next. (It’s worth noting that most solar projects qualify for a 30% investment tax credit which runs to 2016, so the PTC expiration has little effect on the solar market.)

Earlier in the year, the focus of congressional debate on the PTC was the question of how to address it as part of major tax reform. Both House and Senate tax leadership were eyeing major, sweeping proposals that could eliminate many tax incentives. For the PTC and other renewable credits, much of the rhetoric was focused on eliminating the wind tax credit and replacing it with technology-neutral energy incentives, or none at all.

In the final 2013 session, House leadership balked at unveiling a final energy tax package. The House Ways and Means Committee had held numerous working group sessions throughout the year, meeting with the geothermal industry and others to gain input and insight. The Energy Working Group was led by Chair Kevin Brady (R-TX) and Vice Chair Mike Thompson (D-CA).

The Senate Finance Committee released a series of tax reform “discussion drafts,” last but not least of which was their energy proposal released by Chairman Baucus (D-MT) on December 18. The proposal would extend the existing PTC and ITC through 2016 as a transition measure, after which a totally new and technology-neutral credit for energy production would be put in place. The new clean electricity credit would be worth almost exactly the amount as the PTC it replaced and would be awarded to facilities that are at least 25% cleaner than the national average, as measured by the Environmental Protection Agency. The American Wind Energy Association called the proposal “a sound policy option to provide domestic energy producers with stability for the years to come.”

As the dialogue between the House and Senate on tax reform clearly appeared to become a multi-year effort, there was renewed interest in extending the existing PTC in both the House and Senate. On December 16, members of the House Sustainable Energy and Environment Coalition wrote to House Ways and Means Committee leadership urging extension of the PTC and several expiring clean energy tax credits, and on the same day, 25 senators sent a similar message to Senate Finance Committee leaders. But as the year drew to a close, Democratic Leader Senator Harry Reid (D-NV) could not obtain the “unanimous consent” that would have been required to extend some 55 expiring tax provisions. Starting January 1, projects under construction will be assured to qualify for the PTC, but new starts face uncertainty.

So: what is the outlook for the PTC and other clean energy tax incentives in 2014? There is no clear answer, and particularly given the increased level of opposition to the wind tax credit by groups such as the American Energy Alliance, the dynamic is changing. It’s almost certain that there will be efforts both to extend the credit in 2014 and to move forward broader proposals similar to that of the Senate Finance Committee that would permanently replace the PTC and ITC with a longer term clean energy credit. Washington insiders are looking for action on an extenders package early in the year, possibly as an amendment to legislation extending the national debt limit or the Medicaid “doc fix,” both anticipated in the March-April timeframe.

Despite congressional gridlock, in 2014 Washington will continue to move forward on clean energy policy, even if that means principally through regulations proposed and adopted by the EPA. Key leaders in Congress will look for opportunities to move tax extenders, and Congress will debate the need for longer term incentives to promote clean, domestic energy production.

Climate change will continue to be a wild card, and Congress may one day find the will to address it, perhaps after the public or dramatic weather events force it to act. (If one thing is true in the energy policy history, it’s that laws and policies seem to quickly follow crisis events.) And meanwhile, countries around the world and most of the states will continue to move forward with their clean energy laws and policies that will promote geothermal and other clean energy technologies.

International Geo Development in 2014 Gets Shot in Arm from World Bank
An article on World Bank’s Web site describes its views and goals that its geothermal development plans seek to meet. “Many developing countries have sizeable geothermal resources that could provide clean, reliable, low-cost power. But drilling to validate these resources is prohibitively expensive for most countries, and prohibitively risky for private companies. The CTF funding addresses both challenges, and could expand geothermal exploration in these countries by an order of magnitude,” notes Rohit Khanna, Program Manager at the Bank’s Energy Sector Management Assistance Program. An initial influx of $115 million will go toward geothermal energy in four countries.

Reid, Heller Release Discussion Draft On Greater Sage Grouse in Nevada
A press release dated December 20 states: “Nevada Senators Harry Reid and Dean Heller today jointly released a discussion draft of the Nevada Sagebrush Landscape Conservation and Economic Development Act. The proposal would conserve sage-grouse habitat in Nevada while providing economic development opportunities to industries and local governments throughout the state.” The discussion draft is meant to get Nevadans talking about the best course of action in order to avoid negative impacts on both the sage grouse population and on the Nevada economy, and is available at Reid.senate.gov (PDF). Comments can be sent to sagegrouse@reid.senate.gov and sagegrouse@heller.senate.gov.

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