Federal Investment Tax Credit Research Articles

Storing the future of energy: Navigating energy storage policy to promote clean energy generation

AbstractThe United States has experienced heightened interest in clean energy sources, with many states implementing renewable technologies for energy generation. These efforts are critical for moving states and the nation toward decarbonization and decreased emissions within the transportation and power industries. A challenge with renewable sources (particularly solar and wind) is the inherent variability of energy generation due to climate and geographic influences. Consequently, there is increased interest in addressing energy storage technologies to better capitalize on excess power from high‐production periods for use in times of low generation. Energy storage comes in many different forms with varying duration. Several forms of energy storage are explored in this report to demonstrate the variety of technology options. Following research of the current state of energy storage policy, this work proposes three areas of potential policy improvements for industry: (1) implementation of a policy framework for states to produce ambitious energy storage procurement metrics; (2) amending of the federal investment tax credit for energy storage technologies to be duration‐based; and (3) incentivization of sustainable battery practices. It is imperative for state legislatures to create informed energy storage goals alongside current renewable energy metrics. Amending the modern federal investment tax credit system to include duration‐based incentivization will encourage the deployment of long‐duration technologies to combat variation in electricity generation over the course of seasons. Finally, for the continued deployment of batteries, sustainable practices must be implemented to mitigate material and environmental challenges posed by them, including recycling practices and alternative chemistry utilization.

An economic analysis of residential photovoltaic systems with lithium ion battery storage in the United States

Residential photovoltaic systems can reduce reliance on grid electricity, which may be desirable for numerous reasons. However, the economic viability of such systems is dependent on effective use of excess electricity generation, most often through net or bi-directional metering. With recent cost reductions in residential-scale lithium ion battery storage systems, these may be a practical alternative. In this work, we model the lifetime performance and economics of residential photovoltaics with lithium ion batteries across all 50 states in the U.S. We investigate in detail how photovoltaic size and battery capacity affect performance and cost metrics in California, Georgia, and Massachusetts. We find that with appropriate sizing, photovoltaic-battery systems can be more affordable than photovoltaics alone. We demonstrate that these systems may be competitive with grid prices when the federal investment tax credit and favorable financing terms are used, and we calculate the sell-back price required for bi-directional metering to reach cost parity with photovoltaic-battery systems in every state.

Politics in the U.S. energy transition: Case studies of solar, wind, biofuels and electric vehicles policy

We examine the politics of US state and federal policy supporting wind and solar in the electricity sector and biofuels and electric vehicles in the transportation sector. For each technology, we provide two policy case studies: the federal Production Tax Credit (PTC) and state Renewable Portfolio Standards (RPS) for wind; state Net Energy Metering (NEM) and the federal investment tax credit (ITC) for solar; federal excise tax incentives and the Renewable Fuel Standard (RFS) for biofuels; and California's Zero Emission Vehicle (ZEV) mandate and federal tax incentives for electric vehicles. Each case study traces the enactment and later revision of the policy, typically over a period of twenty-five years. We use these eight longitudinal case studies to identify common patterns in the politics of US renewable energy policy. Although electricity and transportation involve different actors and technologies, we find similar patterns across these sectors: immature technology is underestimated or misunderstood; large energy bills provide windows of opportunity for enactment; once enacted, policies are extended incrementally; there is increasing politicization as mature technology threatens incumbents.

Forecasting residential solar photovoltaic deployment in California

Residential distributed photovoltaic (PV) deployment in the United States has experienced robust growth, and policy changes impacting the value of solar are likely to occur at the federal and state levels. To establish a credible baseline and evaluate impacts of potential new policies, this analysis employs multiple methods to forecast residential PV deployment in California, including a time-series forecasting model, a threshold heterogeneity diffusion model, a Bass diffusion model, and National Renewable Energy Laboratory's dSolar model. As a baseline, the residential PV market in California is modeled to peak in the early 2020s, with a peak annual installation of 1.5–2GW across models. We then use the baseline results from the dSolar model and the threshold model to gauge the impact of the recent federal investment tax credit (ITC) extension, the newly approved California net energy metering (NEM) policy, and a hypothetical value-of-solar (VOS) compensation scheme. We find that the recent ITC extension may increase annual PV installations by 12%–18% (roughly 500MW) for the California residential sector in 2019–2020. The new NEM policy only has a negligible effect in California due to the relatively small new charges (<100MW in 2019–2020). Furthermore, impacts of the VOS compensation scheme ($0.12 per kilowatt-hour) are larger, reducing annual PV adoption by 32% (or 900–1300MW) in 2019–2020.

Is $50/MWh solar for real? Falling project prices and rising capacity factors drive utility‐scale PV toward economic competitiveness

AbstractRecently announced low‐priced power purchase agreements (PPAs) for US utility‐scale photovoltaic (PV) projects suggest $50/MWh solar might be viable under certain conditions. To explore this possibility, this paper draws on an increasing wealth of empirical data to analyze trends in three of the most important PPA price drivers: upfront installed project prices, operations, and maintenance (O&amp;M) costs, and capacity factors. Average installed prices among a sample of utility‐scale PV projects declined by more than one third (from $5.8/WAC to $3.7/WAC) from the 2007–2009 period through 2013, even as costlier systems with crystalline‐silicon modules, sun tracking, and higher inverter loading ratios (ILRs) have constituted an increasing proportion of total utility‐scale PV capacity (all values shown here are in 2013 dollars). Actual and projected O&amp;M costs from a very small sample of projects appear to range from $20–$40/kWAC‐year. The average net capacity factor is 30% for projects installed in 2012, up from 24% for projects installed in 2010, owing to better solar resources, higher ILRs, and greater use of tracking among the more recent projects. Based on these trends, a pro‐forma financial model suggests that $50/MWh utility‐scale PV is achievable using a combination of aggressive‐but‐achievable technical and financial input parameters (including receipt of the 30% federal investment tax credit). Although the US utility‐scale PV market is still young, the rapid progress in the key metrics documented in this paper has made PV a viable competitor against other utility‐scale renewable generators, and even conventional peaking generators, in certain regions of the country. Published 2015. This article is a U.S. Government work and is in the public domain in the USA.

State Investment Tax Incentives: A Zero-Sum Game?

Though the U.S. federal investment tax credit (ITC) was permanently repealed in 1986, state-level ITCs have proliferated over the last few decades. Are these tax incentives effective in increasing investment within the state? How much of this increase is due to investment drawn away from other states? Based on a panel dataset for all 50 states, we find a significant channel for state tax incentives on own-state economic activity and document the importance of interstate capital flows. Whether state investment incentives are a zero-sum game is less certain and depends on the definition of the set of competitive states.

State Investment Tax Incentives: A Zero-Sum Game?

Though the U.S. federal investment tax credit (ITC) was permanently repealed in 1986, state-level ITCs have proliferated over the last few decades. Are these tax incentives effective in increasing investment within the state? How much of this increase is due to investment drawn away from other states? Based on a panel dataset for all 50 states, we find a significant channel for state tax incentives on own-state economic activity and document the importance of interstate capital flows. Whether state investment incentives are a zero-sum game is less certain and depends on the definition of the set of competitive states.