Utility Dive Quotes Greg Jenner and Morten Lund on Prospects for Financing Wind and Solar Projects After Expiration of Federal Tax Credits

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Tax attorney Greg Jenner and energy attorney Morten Lund were quoted in Utility Dive in an article titled “US wind, solar finance alternatives rise as sector rushes against looming tax credit expiration,” published October 15, 2019. The article examines alternative means by which wind and solar projects might be financed after the expiration of the federal tax credits for renewables development. Since 2007, the federal production tax credit (PTC) has fueled growth in wind capacity of from under 20 GW to nearly 98 GW and the investment tax credit (ITC) has helped push solar capacity from near none to 60 GW.

The wind and solar industries are hurrying to get projects started before the PTC expires after 2020 and the ITC starts to phase out if construction begins after 2019. Investors are also looking at alternate approaches to financing projects after the tax credits are gone – under consideration is using funding provided by foreign and other investors who cannot take advantage of U.S. tax credits and channeling investor funds to portfolios of smaller wind and solar projects that can be difficult to manage if it is necessary to apportion tax credits within a portfolio.

Extension of the tax credits is uncertain according to Jenner, pushing to the fore the new financing approaches as well as the development of creative alternative incentives to support solar and wind in a more technology neutral and politically viable way. “Never say never with Congress, but a tax extenders addition to the spending bill is probably too much,” he said. “The 2020 election and Ukraine will likely suck the air out of everything, and Senate Committee on Finance Chair Chuck Grassley, R-Iowa, firmly opposes undoing the 2015 deal to phase out tax credits.”

Even with the possible demise of the tax credits in sight and resulting uncertainty in the renewable energy market, Lund sees cause for optimism. “[W]ind without the PTC still crushes fossil and nuclear on price, and billions of dollars of capital without a tax appetite is waiting to come in,” he said.

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Morten A. Lund
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