- American Jobs Plan proposed by Joe Biden has proposes to extend ITC by 10 years while introducing a storage tax credit
- There is also focus on clean energy and rural manufacturing domestically with more than $52 billion investment
- The federal government will use its purchasing power to drive clean energy deployment by purchasing 24/7 clean power for federal buildings
- Establishment of Clean Energy and Sustainability Accelerator is recommended to mobilize private investment into distributed energy resources, as well as retrofits of residential, commercial and municipal buildings
US President Joe Biden has announced his government’s American Jobs Plan to, as the name suggests, create jobs by proposing to invest $2.25 trillion in improving and enhancing the country’s energy and mobility infrastructure, with an eye on achieving a 100% carbon-free power system by 2035. If all goes well, clean energy sources as solar will be one of the major beneficiaries of the scheme.
Among the major highlights of the proposed plan is a 10-year extension of the Investment Tax Credit (ITC), that applies to the solar PV industry, and phase down of an ‘expanded direct-pay’ ITC and Production Tax Credit (PTC) that works for the wind industry. There was, however, no mention of specific levels of the ITC in the proposed plan as shared by the White House.
At the same time, the proposal introduces a storage tax credit which investment bank Cowen’s research analysts see as a ‘positive for both utility scale and residential developers and equipment vendors’ and that this should include energy input from solar and /or wind energy.
At the end of 2020, US congress cleared a $900 billion COVID-19 relief package extending the solar ITC by 2 years (see Before Year 2020 End, Big Win For US Solar PV Industry).
Clean energy manufacturing through federal procurement is another significant point proposed in Biden’s Jobs Plan. It has called on the Congress to invest more than $52 billion in domestic manufacturers with focus on supporting rural manufacturing and clean energy.
Biden has proposed to extend support to state, local, and tribal governments in the form of clean energy block grants. “And, it will use the federal government’s incredible purchasing power to drive clean energy deployment across the market by purchasing 24/7 clean power for federal buildings,” reads the plan.
The plan proposes to establish an Energy Efficiency and Clean Electricity Standard (EECES) to cut electricity bills and electricity pollution while encouraging competition in the market.
It also includes establishing a $27 billion Clean Energy and Sustainability Accelerator to mobilize private investment into distributed energy resources; retrofits of residential, commercial and municipal buildings; and clean transportation. Biden specified, “These investments have a particular focus on disadvantaged communities that have not yet benefited from clean energy investments.”
Another important measure for a successful energy transition in the plan is the proposal to create a targeted ITC to incentivize the buildout of a minimum of 20 GW of high-voltage capacity power lines, mobilizing ‘tens of billions in private capital off the sidelines—right away’. The government also plans to set up a new Grid Deployment Authority at the Department of Energy (DOE).
“The release of these critical infrastructure priorities is just the beginning of a long policymaking process over the coming weeks and months that will require continued focus and determination on the part of elected officials,” said Solar Energy Industries Association (SEIA) President and CEO, Abigail Ross Hopper. “The plan has a clear focus on domestic manufacturing, good jobs for all Americans and clean energy woven throughout.”
Analysts at Cowen see the plan benefitting all the industries it covers, with a ‘notable focus’ on wind, solar and grid modernization, along with sustainability and electrification in its mobility coverage. Nonetheless, they are not quite sure if the Republicans will extend their support to it as the President wants to fund the jobs plan with an increase in corporate taxes to 28%, up from 21%, but won’t increase income taxes for those making less than $400,000 annually. Jeffrey Osborne of Cowen believes the program will head to ‘reconciliation’.