Friday was a good day for continued adoption of solar and wind power projects in the US energy market. US senate passed a $1.8USD trillion spending and tax bill. This is a huge benefit to the US energy markets and to put the sheer size of the bill into perspective, the Canadian GDP for 2014 was $1.78USD trillion. The bill removes the 40yr oil export ban, provides oil industry tax credits and extends federal investment tax credits (ITC) on solar and wind projects. The ITC is currently a 30% tax credit on the price of a solar system and $0.023/kwh tax credit for wind projects.
Bloomberg New Energy Finance researchers estimate the bill will bolster the installed capacity of wind farms and solar facilities in the US by an additional 19GW and 18GW, by 2021, respectively. Fortune: Merry Christmas Clean Energy Industry
The 30% ITC for the solar extension is expected to taper off over the next five years and wind projects would maintain the $0.023/kwh credit until next year, then be reduced by 20%-2017, 40%-2018 and then 60%-2019. The deal was brokered between Republican and Democratic policy makers in exchange for lifting the oil export ban and providing tax cuts. Utility Dive: Congress Passes Tax Cut & Spending Bill
The increased emissions, as a result of lifting the oil export ban, is expected to be more than offset by the increase in renewable energy adoption due to the incentive program.
What impact does this have on the Canadian renewable energy market? Will this detract investment in Ontario’s budding renewable market due to the number of projects and incentives occurring in the US market? How will our lagging dollar impact our renewable energy adoption?
I suspect that this is good news for our renewable energy market in Ontario. The more renewable energy adoption, that occurs in the US market, the lower material and equipment cost will become. This will bring renewable costs closer to that of carbon sources. The cost for electricity in Ontario is also more expensive than many US jurisdictions according to benchmarking performed by AMPCO. There are numerous renewable incentive programs in place in the Canadian market that will help spawn additional investment. Let us also hope the Bank of Canada issues new monetary policy that will positively impact the exchange rate and benefit the importation of new renewable technologies. – Mike Brady, Cofounder, Frederick & Simon Inc.