Ahead of Congress working out a big budget bill this summer, Republicans are signalling their support for preserving key tax credits that support renewable energy’s role in American energy dominance, domestic manufacturing, and lower energy bills for the American people.
“By incentivizing investment in a diverse range of domestic energy infrastructure - from renewables like wind and solar to firm resources like nuclear and hydropower to cutting-edge storage technologies - these credits are bolstering American supply chains, industrial capacity, grid reliability and resilience, and countless high-quality jobs across the nation,” the letter says.
The tax credits in question are the so-called technology neutral tax credits, the Clean Electricity Investment Tax Credit (ITC) and the Production Tax Credit (PTC). The ITC is a 30% tax credit, calculated using the upfront cost of the project, while the PTC calculates a tax credit based on the clean electricity produced by generation facilities.
Taken together, the tax credits helped utilities commit $200 billion to grid expansion and stabilization in 2023 alone, just ahead of a projected spike in energy demand thanks to the growth of data centers and the proliferation of artificial intelligence. The United States is expected to see electricity demand grow 2% in each of the next three years, according to the International Energy Agency. That’s like adding the electricity demand of California to current levels.
“With U.S. electricity demand hitting levels not seen in 40 years, we must act swiftly to dramatically scale up domestic generation capacity from all sources. This expanded capacity is crucial for the U.S. to remain the premier destination for advanced manufacturing, data centers, and other industries that require access to significant, reliable, and affordable power,” the letter reads.
The United States has seen a growth in manufacturing of energy equipment thanks to separate tax credits in the Inflation Reduction Act, with major investments announced for manufacturing equipment for solar panels, batteries, energy efficiency technologies, and more. The tax credits have created well-paying jobs while helping to secure supply chains for these critical technologies.
Ultimately, repealing the technology-neutral tax credits would raise prices for Americans at home. Without them, the cost of electricity would increase 10% by 2026.
“American families and businesses directly benefit from these incentives through lower electricity bills, with industry projections forecasting the ITC and PTC will deliver approximately $45 billion in ratepayer savings through 2031,” the Representatives wrote.
The Investment Tax Credit has also helped spur millions of residential solar installations, securing savings directly for homeowners.
All in all, the technology-neutral tax credits are a key part of “a fiscally responsible path forward that secures energy independence, strengthens domestic manufacturing, supports American jobs, and provides affordable and reliable power to drive economic growth,” according to the letter.
The GOP majority in the House of Representatives is slim. Republicans can lose just four votes to pass something without the help of Democrats.
The Republican representatives that signed the letter, led by Iowa’s Mariannette Miller-Meeks, are Mark Amodei (NV), Don Bacon (NE), Rob Bresnahan (PA), Juan Ciscomani (AZ), Gabe Evans (CO), Vince Fong (CA), Ashley Hinson (IA), Jeff Hurd (CO), Jen Kiggans (VA.), Zach Nunn (IA), and David Valadao (CA).
The Republicans who signed this letter are on the side of American ratepayers and manufacturers and the goal of energy dominance. At a time when America needs every available electron, preserving these tax credits is the right thing to do.
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Neil ChatterjeeChief Governmental Affairs OfficerNeil is Palmetto's chief governmental affairs officer and former chairman of the Federal Energy Regulatory Commission.
