Solar

Legislative wins present opportunities for clean energy contractors

Legislative wins present opportunities for clean energy contractors
July 23, 2017 - Tonapah, NV- Contractors lay pipe at the Crescent Dunes Solar Thermal Facility, owned by SolarReserve. The facility, built with US sourced steel, glass and technology, provides more than 500,000 megawatt hours of electricity per year, available day or night through molten salt storage. Over 1000 construction workers were on site during the peak construction period.(Photo by Dennis Schroeder / NREL)

What with inflation, supply chain problems, a labor shortage, and the Federal Reserve trying to slow economic growth, it’s a challenging time to be a renewable infrastructure contractor.

Fortunately, two of the Biden administration’s signature bills could help ease the challenges for contractors who know how to find and bid for work on the projects that the bills fund or help get funded.

One is the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law (BIL). Enacted last November, it authorized $1 trillion in infrastructure spending over five years, including more than $65 billion to upgrade the nation’s power grid.

The other is the Inflation Reduction Act (IRA), which was enacted in August and contains provisions meant to address climate change by helping to speed the construction of renewable energy infrastructure. The Department of Energy has called the IRA a “$369 billion investment in the modernization of the American energy system” that, in combination with other measures, such as the BIL, will help bring “2030 economy-wide greenhouse gas emissions to 40% below 2005 levels.”

With the federal government already rolling out BIL funding and the IRA authorizing a program that provides tax credits for clean energy generation and electricity storage facilities on which construction begins prior to 2033, the laws have the potential to provide work for renewable infrastructure contractors for the next decade.

Money from the BIL began flowing in summer, resulting in more than 5,300 projects getting started across the country. In addition to announcing projects that are receiving or will receive funding, federal agencies have been announcing the creation of new offices and programs to distribute money from the BIL this year and in the future.

GO DEEPER: Jose Zayas, EVP of Policy and Programs, American Council on Renewable Energy joined the Factor This! podcast to break down the key components of the historic Inflation Reduction Act, which includes $369 billion dedicated to clean energy and climate change.

The Department of Energy says that over the next five years, the BIL will stand up 60 new DOE programs, including 16 demonstration and 32 deployment programs, and expand funding for 12 existing Research, Development, Demonstration, and Deployment programs. Renewable energy contractors interested in keeping up with the latest news on how DOE is implementing the bill can sign up to receive emails from the department on its BIL page.

The DOE also has a list of its BIL programs that contains a link to each one, as well as how much money it’s getting. On top of that, it has a list of funding opportunities made possible by the BIL that says when each was announced and responses to it are due.

Two new entities created by the DOE with BIL funding that are of interest to Renewable Energy World readers are the Grid Deployment Office and Office of State and Community Energy Programs. The Grid Deployment Office will invest $17 billion in programs and projects that bring together community and industry stakeholders to identify and address national transmission, distribution, and clean generation needs, as well as programs to keep nuclear power plants from retiring. The Office of State and Community Energy Programs will provide states, Tribal nations, territories, local governments, school districts, and nonprofits with nearly $6 billion in grants to accelerate the deployment of clean energy technologies to reduce energy costs for households and businesses.

Also of interest to Renewable Energy World readers is the Joint Office of Energy and Transportation, which was created by the DOE and Department of Transportation with BIL Funding to support the deployment of $7.5 billion to build a national electric vehicle charging network with a focus on filling gaps in rural and disadvantaged communities and hard-to-reach locations.

BIL-funded initiatives already covered by Renewable Energy World include the New Floating Offshore Windshot, two programs to modernize hydropower facilities and the Interconnection Innovation e-Xchange, which will attempt to devise methods for reducing the amount of time it takes for renewable energy developers to get their projects approved for connection to the grid.

The IRA also contains provisions designed to speed the connection of renewable generation and energy storage to the grid. One appropriates $2 billion for a direct loan program for the development of transmission projects in National Interest Electric Transmission Corridors (NIETCs). (The Department of Energy may designate an area as an NIETC if building transmission infrastructure in it would alleviate transmission congestion or enable the development of renewable generation.) Another appropriates $760 million for grants meant to facilitate the siting of certain transmission lines by providing transmission siting authorities with funding that they can use to perform transmission siting studies, examine alternative transmission corridors, and participate in federal and state regulatory proceedings, among other things.

By far the biggest boost that the IRA will provide to renewable energy generation will come not from its funding provisions, but from its tax credit provisions. Among other things, those extend the investment tax credit program for solar generation facilities and the production tax credit program for wind generation facilities placed in service through 2024.

The IRA also creates the Clean Electricity Investment Credit and the Clean Electricity Production Credit for generating facilities, such as wind and solar, that don’t produce emissions. The Clean Electricity Investment Credit also can be used on standalone battery storage facilities. (Previously, battery storage facilities had to be part of generation projects to qualify for tax credits.) The credits are scheduled to fade out for projects on which construction begins in 2032, or the year in which the treasury secretary determines that the annual greenhouse gas emissions from U.S. electricity production are less than 25% of 2022 levels, whichever is later.

Analyst firm Wood Mackenzie estimates the IRA will result in more than $1.2 trillion being invested in renewable generation between now and 2035, with annual investment in renewable generation doubling to $80 billion by the end of the decade. If accurate, that should renewable energy contractors will have numerous projects to bid for work on over at least the next 10 years.

My company, FirmoGraphs, maintains a database of federal, state, and local infrastructure projects in the U.S. Based on our experience collecting and curating information for our database, here are some places renewable infrastructure contractors can look to find projects resulting from the IRA and BIL.

The interconnection queues of the nation’s regional transmission organizations (RTOs) and independent system operators (ISOs) contain plenty of projects, many of which have a greater likelihood of getting built thanks to the IRA and BIL. A study that was led by the Lawrence Berkeley National Laboratory and released in April found RTO and ISO queues contained more than 1,300 gigawatts, or $2 trillion, of wind and solar generation and energy storage projects that their developers were seeking to have connected to the grid.

Contractors looking for renewable or storage projects to bid on also can find them in filings that the projects’ developers make with state utility regulatory commissions, as well as in press releases from the developers themselves. The transmission projects that will be needed to bring those renewable and storage projects online also can be found in regulatory filings and press releases from the generation, storage, and transmission project developers. Additionally, developers and regulators usually make announcements when major projects are approved, and news outlets such as Renewable Energy World often provide coverage of those announcements.