Federal legislation that would invest about $375 billion to deal with climate change could mean “gigawatts and gigawatts” of new renewable energy and thousands of new jobs in Colorado and across the country, industry representatives say.
The bill that passed the Senate along partisan lines Sunday is on its way to the U.S. House, which is expected to vote on it Friday. The measure, called the Inflation Reduction Act of 2022, would extend solar-energy tax credits for a decade and provide incentives to expand domestic production of solar panels and other equipment.
“For the first time in our history as an industry, we have a clear, decade-long and firm policy that allows business owners to evaluate where they’re at and make investments accordingly,” said Mike Kruger, president and CEO of the trade group Colorado Solar and Storage Association.
Without the bill, the investment tax credit for solar will expire in 2024. With the bill, Kruger predicted that “gigawatts and gigawatts” of new solar projects will be added.
The national Solar Energy Industries Association expects the country’s workforce of about 250,000 in the solar and battery-storage sectors to quadruple. Colorado’s estimated workforce of 7,000 will likely double by the end of the decade as a result of the federal legislation and the state’s renewable-energy goals and requirements to reduce greenhouse-gas emissions, Kruger said.
For the first time, stand-alone storage projects would be eligible for tax credits. Kruger said the bill would open more avenues for community solar gardens, rural electric cooperatives and nonprofits that want to install solar projects because they could opt for direct payments rather than tax credits.
“This is a game-changer,” said David Amster-Olszewski, founder and CEO of SunShare, a leading community solar company based in Colorado. “We’re accelerating our hiring plan after this.”
Amster-Olszewski said this year has been tough for the solar industry because of ongoing supply-chain problems, inflation and tariffs on imported parts. “But we’ve been changing our strategy in the last 10 days based on this because it signals a massive investment over the next decade, which gives us certainty.”
Creating a direct-pay option for solar and wind energy in place of tax credits increases opportunities for not-for-profit utilities to directly invest in renewable projects and “deliver even lower costs for our rural consumers,” said Lee Boughey, spokesman for Tri-State Generation and Transmission Association.
As a not-for-profit, Tri-State typically buys renewable energy through a company that can take advantage of the tax credits because they have a tax liability. Tri-State, a wholesale power provider with members in Colorado and three other states, does not.
“This puts cooperatives, finally, on a level playing field with other utilities and removes the barriers for our direct investment in renewable projects,” Boughey said.
The tax credit rates for commercial and industrial projects would drop after the first two years, but could be bolstered by incentives for using products made in the U.S., paying the prevailing wage and locating in disadvantaged communities or ones affected by the closure of fossil-fuel operations.
“The largest economy in the world has finally taken major action on climate change. These are provisions, policies and certainty that we have been advocating for and lobbying for for the last decade,” Abigail Ross Hopper, president and CEO of the national group Solar Energy Industries Association, said Monday in a call with reporters.
Hopper credited Colorado Sens. John Hickenlooper and Michael Bennet for helping pass the bill in the Senate, calling the Democrats “clear and important advocates for this clean energy transition.”
Hickenlooper has been credited with keeping communication going with Sen. Joe Manchin when it looked like the West Virginian’s opposition would doom the bill. Democrats needed approval from all 50 of their members and Vice President Kamala Harris to break the tie vote before the bill could clear the Senate.
The $740 billion legislation includes tax rebates for new or used electric vehicles. It would cap prescription drug costs and allow Medicare for the first time to negotiate the prices of some medicines directly. The bill will be funded in part by a 15% minimum tax on corporate profits.
Hopper said the investment is important for the transition to cleaner energy. She said the government has always played a role in providing incentives for the production of energy.
“There’s nothing that happens in our world that is not predicated on the availability of reliable, affordable and, I would add, sustainable energy,” Hopper said.
