House Stimulus Package to Benefit Marine Renewables

A proposed House stimulus bill contains several provisions that would give a boost to marine renewables, through a variety tax incentives and financing mechanisms (clean energ bonds) that will help bring needed capital to marine renewables projects.  To view the legislation, click here. Here’s a summary of the features that would benefit marine renewables.

• Long-term extension and modification of renewable energy production tax credit. The bill extends the in-service date for the production tax credit (PTC) for wind facilities through December 31, 2012, and for marine renewables through December 31, 2013.
• Temporary election to claim the investment tax credit in lieu of the production tax credit. The bill will allow marine renewables facilities placed in service in 2009 and 2010 to elect either a PTC (which is currently worth 1 cent/kwh payable over a ten year period) or an upfront 30 percent investment tax credit (ITC) in the year that the facility is placed in service.  If a marine developer cannot use the ITC, it may apply to DOE to convert the dollar value of the ITC into a grant.
• Repeal subsidized energy financing limitation on the investment tax credit. The bill would repeal this subsidized energy financing limitation on the investment tax credit in order to allow businesses and individuals to qualify for the full amount of the investment tax credit even if such property is financed with industrial development bonds or through any other subsidized energy financing.
• Clean Renewable Energy Bonds (“CREBs”). The bill authorizes an additional $1.6 billion of new clean renewable energy bonds to finance facilities that generate electricity from various renewables, including marine renewables.
• Enhanced R&D credit. The bill would provide for an enhanced twenty percent (20%) R&D credit in taxable years beginning in 2009 and 2010 for research expenditures incurred in the fields of fuel cells, battery technology, renewable energy, energy conservation technology, efficient transmission and distribution of electricity, and carbon capture and sequestration.  We anticipate that these provisions will encompass marine renewables.

OREC supports these provisions, though the 2009-2010 time frame for eligibility is narrow.  We will be exploring the feasibility of extending the time frame, or perhaps making it applicable to projects that begin construction between 2009-2010 instead of being placed in service as of that date.  But overall, OREC supports the general concept of allowing marine renewables developers to opt for either an ITC or PTC.  An ITC/PTC election, with potential ITC/grant exchange ensures developers maximum flexibility in structuring financing deals and generating funding to build projects.  Though the PTC for marine renewables and several other technologies still remain at half the value for wind (1 cents/kwh as opposed to 2 cents/kwh), the benefits of an ITC/PTC election and the ITC conversion compensate for the lack of parity in this limited area.

To view an 84 page summary of the House stimulus tax provisions, click here, and for revenue estimates, click here.

If you have further questions about this legislation, please contact Sean O’neill at sean@oceanrenewable.com or carolynelefant@fercfights.com.