‘Landmark’ climate law turns up the power on Pa. solar, wind, hydropower energy projects
September 6, 2022
Green energy is bracing for growth.
The climate law signed by President Joe Biden in August is poised to drive a surge of investment in renewable energy as it extends and expands tax credits that have proven crucial to establishing clean energy on the grid.
Solar, wind, hydropower and energy storage industries are major beneficiaries of the Inflation Reduction Act, which analysts expect will cut U.S. greenhouse gas emissions 40% by 2030 from 2005 levels.
Advocates for an array of renewable energy industries in Pennsylvania agree that a key benefit of the climate law is the certainty it provides to project developers by broadening clean energy tax credits, increasing their maximum rates and extending them for a decade or more.
That’s a change from the past, when short-term extensions and phase outs created booms and lulls.
Paul Jacob, CEO of Boston-based Rye Development, which has a pipeline of 10 hydropower projects scheduled to be built on existing locks and dams on the Allegheny, Ohio and Monongahela rivers, said one of the most important aspects of the bill is its far horizon.
That will give developers more certainty for planning projects, financing them and partnering with large energy users that want to purchase their power. It also allows time for the supply chain, inflation and labor market issues that are bedeviling all corners of the economy to be alleviated, he said.
“This is a more realistic approach and that’s, frankly, rare,” he said. “That’s going to get a lot of things built, not just our thing.”
Tax credit bonuses in the law reward project developers for paying prevailing wages, operating apprenticeship programs and using domestic materials — all signals that the transition to a clean energy economy will require making more of its components in the U.S. with workers that are paid livable wages.
Pennsylvania is poised to benefit from provisions in the law that give tax credit bonuses to companies that site clean energy projects in communities that are economically tied to fossil fuel extraction or have seen factories, power plants and mines close.
The rules for implementing those “energy community” provisions haven’t been written yet, but Mr. Jacob and others said they are likely to stimulate the development of renewable energy projects in and around southwestern Pennsylvania. It could be a factor as the hydropower developer looks for “new opportunities in the region,” beyond the 10 projects it has in the works here, Mr. Jacob said.