December 18 (Renewables Now) - The final version of the US tax reform bill, released on Friday, includes a change to the new Base Erosion Anti-Abuse Tax (BEAT) provisions which is designed to avert a hit to tax equity financing for renewable energy projects.
Clean energy groups had warned that the tax equity market would collapse under the BEAT provisions, causing a big fall in the deployment in wind and solar facilities. In a joint letter to the US Senate at the end of November, the American Council on Renewable Energy (ACORE), the solar and wind energy associations AWEA and SEIA, and Citizens for Responsible Energy Solutions called for an amendment to exempt the production and investment tax credits (PTC and ITC) from the calculation of the BEAT tax.
The final version of the bill says that tax credits for renewable energy such as wind and solar can be used to offset up to 80% of the BEAT tax. ACORE, however, is still concerned about the potential impacts on renewable energy finance. "Even as we recognize that important progress was made in the effort to repair those provisions, we also note that the applicability of the new tax was expanded by conferees," the organisation said in a statement.
ACORE added that it will take some time to evaluate the statutory wording and determine how the financial institutions that invest in wind and solar power will respond. It is "uncertain how the marketplace will react to the fact that more multi-national firms may now be covered by the BEAT, and tax credits may not all be useable in any given year."
The final version of the tax bill keeps the tax credits for the wind and solar industries unchanged. The wind sector in particular had been threatened by a significant scale-back of incentives under the House version of the bill. The final version was released after a House-Senate conference committee worked to reconcile the versions of the two chambers. It is to be voted this week by the entire House of Representatives and Senate.