Library filed under Taxes & Subsidies
Mr. Obama’s budget would permanently extend the production tax credit for wind electricity, which expired last year after Congress failed to pass a bill renewing it. Over the next 10 years, the tax credit would cost $19.2 billion, according to the budget plan.
“We have a long way to go before Chairman Camp’s tax reform bill is final and, no doubt, the debate over tax-extenders will be rigorous. But this is a rare opportunity for American taxpayers to once and for all eliminate the near-permanent temporary tax credits.”
Under the new scheme, companies will have to sell their electricity to the national grid under a competitive bidding system. The new scheme will limit the total amount of subsidies available for green energy; previously the subsidy budget was effectively limitless. The change has led to developers scrapping wind farm schemes amid claims that the new system will make future wind farms unprofitable.
Critics say it has not attracted investment, but has handed windfall profits to green plants built before it was introduced. Most damagingly, they say, it makes UK manufacturers uncompetitive and pushes up consumer energy bills.
In their annual report, Harhoff and his colleagues have called for the abolition of the EEG altogether. They concluded that the promotion of renewable energy makes electricity more expensive, and doesn't even lead to enhanced climate protection or more innovation. ...The EEG hinders innovation because the risk of investing in new technologies is not rewarded by the market.
Acciona posted a net loss of €1.97bn (£1.62bn, 2.8bn US$) in 2013, which it says is a result of the impact of regulatory reforms to Spain’s energy sector that were approved, with retroactive effects, last year. ...Acciona Infrastructure revenues fell 17.8% in 2013 to €2.73bn, as a result of a fall in construction activity in Spain and abroad. EBITDA fell 49.6% to €82m.
While Davis reiterates that the proposal equates to one of discussion, the draft language suggests that Camp views the IRS guidance as “too liberal.” If that is the case, such a viewpoint “could have a chilling effect on the wind industry and participants as to what it takes to satisfy the ‘commence construction’ requirements.”
A bill designed to shield Oregon's renewable energy mandates from a potentially game-changing ballot measure sailed through the Senate's Business and Transportation Committee Tuesday, even as opponents called it a back-room deal hatched to benefit industry insiders and ignore average citizens. ...Irene Gilbert said the bill circumvents the opportunity for citizens negatively impacted by the renewable mandates to have a say in what is counted toward meeting them.
House Ways and Means Chairman Dave Camp released his highly anticipated proposal to overhaul the tax code today, aiming to eliminate lucrative tax breaks that touch all energy sectors ...Renewable firms appear to be big losers under the proposal. Not only would Camp not reinstate expired clean energy incentives such as the renewable energy production tax credit (PTC), he also would dramatically reduce payments to companies still eligible for the credit.
Germany should scrap its clean-energy subsidies because the system has driven up electricity costs for consumers and hasn’t spurred innovation or reduced greenhouse gases, a group of government advisers said. The uncapped aid provided by the system known as EEG "isn’t a cost-efficient instrument for climate protection nor does it have a measurable impact on innovation,” the commission said in the report. “That’s why there is no basis for the continuation of the EEG.”
The Coos County commissioners took their concerns about the wind park and its spike in equalized valuation and taxes in two unincorporated places before the N.H. Supreme Court last week in a case that could have statewide ramifications. The commissioners are appealing the July decision by the New Hampshire Board of Tax and Land Appeals that upheld the total equalized valuation set by the New Hampshire Department of Revenue Administration for the unincorporated places of Millsfield and Dixville.
The expanded PTC could be viewed as a successful incentive that led to societally beneficial behavioral changes. However, this tax benefit operates within a web of overlapping energy production incentives that often work at cross purposes; currently, the PTC is one of 42 different tax breaks to aid certain energy technologies, 25 of which regularly expire (Plumer 2013).
Wind farm firms have been accused of building huge, ineffective turbines to exploit a lucrative loophole funded by the taxpayer. Labour MP Sir Tony Cunningham, who represents Workington in Cumbria, recently quizzed the Westminster Government to find out what action it was taking. In response to his parliamentary question Energy Minister Michael Fallon revealed he was aware that eight of 110 turbines installed at the higher 100kw to 500kw FIT rate up to September 2013 had been de-rated.
MAKE estimates nearly 3 GW of hedged projects will come to fruition during our forecast period, with developers that are unable to obtain a PPA or access alternative finance arrangements being forced to cancel development plans or sell their assets to larger IPPs with greater financial capabilities. The window of opportunity for these stressed developers will not be open indefinitely. ...PTC-qualified developers in need of offtake agreements will be scrambling to find financing that allows them to partake in the U.S. wind industry’s latest bubble.
According to the report, published online in December by the Treasury Inspector General for Tax Administration, eight of 16 large firms examined may have filed for either the federal Production Tax Credit or Investment Tax Credit on projects that had received 1603 program funding. Smaller businesses, including some sole proprietorships, fared worse: 51 of 83 such ARRA grant recipients examined may have filed for tax credits on subsidized projects, about 61 percent of the total.
What's the real cost of wind power? For New Hampshire, it’s nearly $10 million in handouts to big business. They paid that much money in 2012 so that multi-national corporations could experiment with wind power on the taxpayer dime — and yet more than $4 million of that money wound up going to companies in other states.
Subsidies extracted from shale gas would help to replace tax credits for wind and other renewables that are due to expire at the end of this calendar year. Environmentalists who favor renewables understand the problems of asking Congress for new subsidies in the current political climate. Instead, the idea is to force the fossil fuel industry to subsidize renewables—by buying its way out of onerous environmental rules that the executive branch can promulgate.
"Look, the Renewable Energy Target is - it's corporate welfare on a massive scale directed towards the renewable sector. I don't know why anyone would have any level of sympathy for businesses that - they don't employ many people, that they don't export anything and they've surreptitiously imposed these massive costs on energy consumers for the sake of lining their own profits."
Sector-wide returns have been so poor that few of the large energy-focused US private equity houses that have launched dedicated renewables funds to date are expected to offer follow-up funds. “Just 22 per cent of funds have an IRR [internal rate of return] over 3 per cent. To me 3 per cent is losing money because you have a cost of capital. Just looking at the numbers, it does not really stack up in the private equity world,” he said. Joseph Dear, chief investment officer of Calpers, the world’s sixth-largest pension fund, last year described clean-tech investment as a “noble way to lose money”, with Calpers having suffered annualised losses of 9.7 per cent in the sector.
"One risk is that other countries copy what Spain is doing," the European Wind Associaiton (EWEA) policy department told Windpower Monthly in a statement. "Already we see renewable-energy support systems being changed or threatened with change, scaring off investors in several countries," it added, citing Poland, Bulgaria and "even Germany".