Does this affect the ability for all generation sources to procure securitization bonds for large maintenance, stranded assets, and disaster relief that saddles rate payers for decades with the cost of building, maintaining, and risk for assets they have no control over? No? Then these pennys that are being taken away mean nothing compared to the bonds all utility scale projects, whether it’s solar or traditional fossil fuel, force the average consumer to bear the burden of.
Good question for sure. I have little experience with the financial side of the business but the developers I talk to about grid connection are very concerned about the subsidies. Their costs of the actual project, and it’s grid connection are passed on to ratepayers in one form or another, but the subsidies and tax credits seem to be a big deal to them.
I'd suggest that these changes do not effect entities ability to securitize assets, at least not here in Arizona. I believe that state legislation recently opened the door for the securitization of certain assets, potentially our Four Corners power plant (coal). I've not heard of any linkage between securitization and tax credits.
Anything that forces the Private Equity and big banks to think twice about utility scale solar or wind projects is a good start. The other important element is for the local residents who will suffer the consequences of these juggernauts of federal grift get galvanized and stop the slick developers from promising the world and deliver nothing. They are all a mile wide and an inch deep!
I am watching to see if this one that is less than ten minutes from my home gets under the dead line. So far they have not turned a spade of dirt, I am betting not. They were in a long protracted legal battle they just won in the Ohio supreme court that delayed them for years.
Good luck on the developer's lawyers and accountants not finding a way to make the legal costs of that fight countable as "having spent 5% or more on the project" so they qualify for subsidies.
Seems like a win for Big Wind and Solar. Contracting the building of a piece of equipment (like a transformer) still counts as having begun construction. Don't see why y'all are so pleased about this.
This is a really good point and I’ll make sure to keep an eye out for other interpretations of what this means. I had heard they might also keep the five percent rule and leave everything virtually unchanged so this was much better than that.
Read today's Heatmap Daily. As a rule of thumb, anything they're happy about, I'm not. And they are very chipper about this development. Headline: "Treasury Guidance for Wind and Solar Tax Credits Could Have Been So Much Worse." 😖
I don't think I have a paid subscription, but I receive their "Daily." I signed up somewhere along the way. But, yes, it may well be worth the subscription for op research. Attended a webinar they had a couple months ago. Check this out: https://vimeo.com/1094147647/c92fdd8c7e?share=copy
Thank you for continuing to report on this topic. I was very concerned with the final version of the BBB, but perhaps these extra steps will put things right.
Hurray! This is a giant win for taxpayers! And probably a win for rate-payers of utilities that either purchase solar or fund (even subsidized) solar generation assets.
Thanks are due to the DOE techies & cost estimators who survived the Granholm purge of professionals, and explained just how wasteful that 5% safe harbor loophole could get!
This seems to have some teeth. Hopefully so. In California if you apply today to connect a solar project to the grid your connection date will likely be 2032. This doesn’t really match up well with the new under construction rules. There’ll be screaming and gnashing of teeth. One more thing for Newsome to sue the federal government for.
I fully agree with the multiple comments below that this is a win for tax-payers and utility customers. Tax credits don't reduce the cost of a project, they just shift a significant share of it to the federal deficit.
I was shocked by the loose performance and financial analysis of a few wind projects I reviewed a few years ago. A few observations from this analysis:
a) The PTC's represented a very significant portion of the project revenue - not close to being economically viable without them.
b) The project owner's were potentially less focus on the initial project performance and economics due to the assumptions that they would just "re-power" the project after 10-years to renew the PTC's for another 10-years.
c) The environmental impact of wind turbines is not in-significant (birds, bats, bald eagles).
d) Utilities struggle with non-regulated business and long-term contracting when is it not supported by period rate adjustments. Utilities invest in a lot of long-term resources / contracts....but with rate recovery for any initial cost over-runs and or long term cost growth (sustainment costs). A entity knowledgeable in commercial, long-term contracting would never approve a 25-year deal where the revenue was mostly fixed, but the costs were fully exposed to escalation indices.
The much need OB3 beginning of construction definitions will also impact the new nuclear space. Given the significant value of the 30% to 50% ITC, my guess is the project developers will want to lock-in eligibility well before the YE2033 deadline as I understand it. This is drive a lot of project approvals in the late 2020's to ensure tax credit eligibility requirements are met by the 2031/2032 timeframe. Our preliminary analysis shows a project qualifying for a 40% ITC (base + energy community) yields a 32%-33% net tax credit after exclusions are removed.
Does this affect the ability for all generation sources to procure securitization bonds for large maintenance, stranded assets, and disaster relief that saddles rate payers for decades with the cost of building, maintaining, and risk for assets they have no control over? No? Then these pennys that are being taken away mean nothing compared to the bonds all utility scale projects, whether it’s solar or traditional fossil fuel, force the average consumer to bear the burden of.
This is something I haven’t thought of before. Do you have some resources you’d recommend that I can dig into on this topic?
Absolutely. Would love to see what you write up after digging into it. Check these two examples out:
El Paso Electric’s Newman 6 Gas + Solar Hybrid / Liberty Utilities Solar Securitization (Missouri)
And
Comanche Peak Nuclear + Gas Plant Securitizations (Texas)
Two perfect examples of generation sources that both ended up as stranded assets that their rate payers in the service area are still paying for.
Good question for sure. I have little experience with the financial side of the business but the developers I talk to about grid connection are very concerned about the subsidies. Their costs of the actual project, and it’s grid connection are passed on to ratepayers in one form or another, but the subsidies and tax credits seem to be a big deal to them.
I'd suggest that these changes do not effect entities ability to securitize assets, at least not here in Arizona. I believe that state legislation recently opened the door for the securitization of certain assets, potentially our Four Corners power plant (coal). I've not heard of any linkage between securitization and tax credits.
Anything that forces the Private Equity and big banks to think twice about utility scale solar or wind projects is a good start. The other important element is for the local residents who will suffer the consequences of these juggernauts of federal grift get galvanized and stop the slick developers from promising the world and deliver nothing. They are all a mile wide and an inch deep!
I am watching to see if this one that is less than ten minutes from my home gets under the dead line. So far they have not turned a spade of dirt, I am betting not. They were in a long protracted legal battle they just won in the Ohio supreme court that delayed them for years.
https://www.harveysolar.com/
https://www.courtnewsohio.gov/cases/2025/SCO/0430/230793.asp
Good luck on the developer's lawyers and accountants not finding a way to make the legal costs of that fight countable as "having spent 5% or more on the project" so they qualify for subsidies.
Anna, nothing surprises me anymore. The only thing that talks in money, and who has more.
Seems like a win for Big Wind and Solar. Contracting the building of a piece of equipment (like a transformer) still counts as having begun construction. Don't see why y'all are so pleased about this.
This is a really good point and I’ll make sure to keep an eye out for other interpretations of what this means. I had heard they might also keep the five percent rule and leave everything virtually unchanged so this was much better than that.
Read today's Heatmap Daily. As a rule of thumb, anything they're happy about, I'm not. And they are very chipper about this development. Headline: "Treasury Guidance for Wind and Solar Tax Credits Could Have Been So Much Worse." 😖
That’s a very good rule of thumb. So you’d say heat map is worth the subscription?
I don't think I have a paid subscription, but I receive their "Daily." I signed up somewhere along the way. But, yes, it may well be worth the subscription for op research. Attended a webinar they had a couple months ago. Check this out: https://vimeo.com/1094147647/c92fdd8c7e?share=copy
A real eye opener.
Thank you for continuing to report on this topic. I was very concerned with the final version of the BBB, but perhaps these extra steps will put things right.
We’ll update everyone when we learn more about how this is likely to be interpreted
Hurray! This is a giant win for taxpayers! And probably a win for rate-payers of utilities that either purchase solar or fund (even subsidized) solar generation assets.
Thanks are due to the DOE techies & cost estimators who survived the Granholm purge of professionals, and explained just how wasteful that 5% safe harbor loophole could get!
This seems to have some teeth. Hopefully so. In California if you apply today to connect a solar project to the grid your connection date will likely be 2032. This doesn’t really match up well with the new under construction rules. There’ll be screaming and gnashing of teeth. One more thing for Newsome to sue the federal government for.
Very important interpretation. Thanks!!
What is considered “start of construction “ for BESS facilities?
I fully agree with the multiple comments below that this is a win for tax-payers and utility customers. Tax credits don't reduce the cost of a project, they just shift a significant share of it to the federal deficit.
I was shocked by the loose performance and financial analysis of a few wind projects I reviewed a few years ago. A few observations from this analysis:
a) The PTC's represented a very significant portion of the project revenue - not close to being economically viable without them.
b) The project owner's were potentially less focus on the initial project performance and economics due to the assumptions that they would just "re-power" the project after 10-years to renew the PTC's for another 10-years.
c) The environmental impact of wind turbines is not in-significant (birds, bats, bald eagles).
d) Utilities struggle with non-regulated business and long-term contracting when is it not supported by period rate adjustments. Utilities invest in a lot of long-term resources / contracts....but with rate recovery for any initial cost over-runs and or long term cost growth (sustainment costs). A entity knowledgeable in commercial, long-term contracting would never approve a 25-year deal where the revenue was mostly fixed, but the costs were fully exposed to escalation indices.
The much need OB3 beginning of construction definitions will also impact the new nuclear space. Given the significant value of the 30% to 50% ITC, my guess is the project developers will want to lock-in eligibility well before the YE2033 deadline as I understand it. This is drive a lot of project approvals in the late 2020's to ensure tax credit eligibility requirements are met by the 2031/2032 timeframe. Our preliminary analysis shows a project qualifying for a 40% ITC (base + energy community) yields a 32%-33% net tax credit after exclusions are removed.
Astoundingly good to hear.