This week, Illinois Rep. Sean Casten introduced a bill that will revive the 1603 grant program formulated in the year 2009 under the American Recovery and Reinvestment Act. The 1603 program amounts to about 800 billion US dollars initiative that congress approved the outcome of the significant decline allowed in the renewable energy projects that will receive more than 30 percent of the capital cost of the project in monetary payment. The act made developers free from relying on tax equity markets, which monetize the production and investment tax credits given to renewables. Rep Casten’s bill aims to reinstate the monetary grant program for the ITC and PTC throughout this year up to the end of 2022respectively, for the projects that began 1st Jan 2020. In the program, a wide variety of technology will benefit from the cash grant program, which includes geothermal, biomass, solar, wind, hydropower, and some of the innovative solutions to the production of renewable energy.
Like what happened in the year 2009, when there was a financial crisis, the ongoing global economic fall has limited the presence of tax equity financing. The financial downfall will do the new project for renewable energy to stagnate. The development of renewable energy is from investors’ perspective when the environment becomes safe and mature to invest in compared to gas and oil. The two ideas will provide a financial fragment for the whole renewable industry because of the coronavirus pandemic. The muscular investors will take advantage of the available access to the tax equity market, and the small investors will be behind.
A large number of tax-equity providers in the United States renewables like JPMorgan, Bank of America is continuing with the financing of renewables programs and projects. Engie, a retail electricity provider in the whole of the United States, said in April that the company had received a 1.6 billion US dollars tax equity package that covered the 2 gigawatts of renewables from two major banks. On the other hand, the sPower who is a utility-scale energy developer said it had 350 million US dollars of tax equity from Wells Fargo to fund a 620 Megawatts solar project in VA. The above is the largest solar project in the east of the Rockies. The reduction in the desire to have tax-equity financing will, on the other hand, affect small businesses in the renewable energy sector and might cause project cancellation.