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Renewable Energy Under the Biden Administration and the Consolidated Appropriations Act of 2021: Spurring Development

Treasury Agrees to Extend Tax Credit Safe Harbor for Wind and Solar Projects But Is Silent on Specifics Background Decorative Image

The Biden administration has committed to supporting increased renewable power generating capacity, calling to decarbonize the national electric grid by 2035. President Biden has already begun taking steps to support this goal, including a recent Executive Order directing the Department of Interior to review and assess options for increasing renewable energy production on federal lands and in federal offshore waters, with the goal to double offshore wind energy production in federal waters by 2035. While the president will likely seek additional funds and legislation from Congress to spur renewable development, the stimulus passage enacted into law at the end of 2020 may help drive early action in this area. On December 27, 2020, former President Trump signed into law the Consolidated Appropriations Act, 2021 (“Act”).1 A part of the Act — Division Z — includes the bipartisan Energy Act of 2020 (“Energy Act”), a comprehensive national energy policy update which encourages research and development programs, fosters carbon management and carbon removal, and provides extensions for key renewable energy tax credits. This article analyzes the wind and solar energy provisions of the Energy Act, while a companion piece provides an overview of the carbon management and carbon removal sections and the incentive programs thereunder.2

The Energy Act of 2020 provides approximately $35 billion in funding over the next five years through a collection of programs dedicated to research and development in key renewable energy fields. Title III of the Energy Act, Renewable Energy and Storage, includes Sections 3003 and 3004, which focus on wind and solar energy, respectively. Although the two provisions largely share the same purposes, targets, and activities, there are a few differences in the subject areas in which research and development is to be conducted.  Most notably, a key difference between the two provisions is the amount of appropriations authorized for such programs. For solar energy, the Energy Act provides $1.5 billion; for wind energy, the Energy Act provides $625 million.

For both provisions, the Energy Act authorizes the “research, development, demonstration, and commercialization” of wind and solar energy technologies. Several purposes provide the rationale for these programs, many of which are broad in scope.  For example, research and development is to focus on numerous improvements to include “energy efficiency, cost effectiveness, reliability, resilience, security, siting, integration, manufacturability, installation, decommissioning, and recyclability” of wind and solar energy technologies.  Other purposes seek the optimization of the “performance and operation” of wind and solar energy components alongside the “design and adaptability” of such technologies. Further, the Energy Act seeks research and development designed to reduce risks, costs, and other negative impacts associated with the lifespan of wind and solar energy technologies as well as mitigation of these technologies on the environment, human communities, and commerce.

Following the Act’s enactment date, the Secretary of Energy (the “Secretary”) is to establish targets within 180 days that focus on the challenges to the advancement of wind and solar energy technologies. These targets will focus on the near term (up to two years), the mid term (up to seven years), and the long term (up to fifteen years) and include, for wind, challenges pertaining to onshore, offshore, distributed, and off-grid technologies. In order to carry out wind and solar energy research and development, the Energy Act provides numerous “activities” which the Secretary can undertake. These include awards of competitive grants, the provision of technical assistance, the provision of small business vouchers, and the establishment of demonstration facilities and projects. The Secretary can also conduct studies, analyses, and reports, as well as professional development, education, and outreach activities.

As noted above, $625 million is authorized for the research and development of wind energy. This amount is broken down over five years — 2021 through 2025 — for a total of $125,000,000 per year to fund materials and design research, the manufacturing and installation of technologies and practices, and the integration of wind energy systems to incorporate diverse generation sources, loads, and storage technologies. Additional subject areas for which the funds are allocated include the research and development of offshore wind-specific projects and plants; wind forecasting and atmospheric measurement systems; technologies to avoid, minimize, or offset potential impacts of wind energy facilities on bird and bat species, sensitive species and habitats, and marine wildlife; and methods to improve the sustainability of wind energy components and systems.

Section 3003 of the Energy Act also establishes a wind technician training grant program. Under this program, the Secretary can award competitive grants to eligible entities enabling the purchase of larger wind component equipment (i.e. nacelles, towers, blades) in order to train wind technician students in either onshore or offshore wind applications. The section also incorporates other programs to include a “wind energy technology recycling research, development, and demonstration program” and a “wind energy technology materials physical property database.”

For solar energy, the Act authorizes $1.5 billion for numerous research and development programs. Again, this amount is broken down over five years — 2021 through 2025 — for a total of $300,000,000 per year.  Subject areas for which these funds are allocated include the advancement of solar energy technologies “of varying scale and power production” which encourage the use of new materials, such as perovskites, cadmium telluride, and organic materials, alongside photovoltaic and thin-film devices, concentrated solar power, solar heating and cooling, and hardware and software technologies. The funds are also dedicated to programs that promote the integration of solar energy technologies with the electric grid, other energy technologies, and other applications, alongside similar programs as those incorporated under the wind provision: the integration of solar energy systems to incorporate diverse generation sources, loads, and storage technologies; solar forecasting, modeling, and atmospheric measurement systems; and methods to improve the sustainability of solar energy components and systems.

Specific programs under Section 3004 of the Energy Act follow the same lines as those established under Section 3003; for example, the Secretary can provide financial assistance for a “solar energy technology recycling research, development, and demonstration program” and a “solar energy technology materials physical property database.” However, instead of a technician training grant program, Section 3004 establishes a solar energy manufacturing initiative to advance new manufacturing technologies and techniques.

It remains to be seen how the Biden administration and its Department of Energy will leverage funding authorized under the 2020 stimulus to meet the administration’s ambitious policy goals. The stimulus presents numerous opportunities for the renewable energy industry to seek grants and form partnerships to develop new technologies to support the increased development of renewable generation capacity.

1 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong. (2020).

2 For an overview of the extensions of renewable energy tax credits, please see Consolidated Appropriations Act, 2021: A Christmas Present for the Renewable Energy Industry, V&E (Dec. 22, 2020).

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.