June 7, 2021
In March of 2021, U.S. Senators Tom Carper, Martin Heinrich and Sheldon Whitehouse introduced the Save America’s Clean Energy Jobs Act to help recover almost 430,000 clean energy jobs lost from February to December of last year. The legislation states it would provide tax relief to clean energy companies like CleanSpark and aid in the creation of more jobs in the sector. It allows temporary refundability of tax credits in sections 45, 45Q and 48, incentivizing private development of renewable energy projects. Solar, wind, fuel cells, and carbon capture or sequestration are all methods that would receive aid under the bill.
Although a good start, the bill seems to be missing a direct discussion of distributed energy and instead focuses on large-scale generation. We all know utility-scale projects can be an effective way to increase total renewable energy on the grid. But what happens when the infrastructure supporting the grid goes unchanged? We would arrive in a cleaner future but one in which the methods of distribution remain highly ineffective.
A more efficient way to generate, use and store energy over a smaller system is in the form of microgrids. This can be done at utility-scale and even provide the larger grid with crucial support in the form of grid services when there are outages or changes in demand. Microgrid controls and energy management software assist in utilizing the energy in the best way possible. Thankfully, the bill has great potential to make a positive impact on microgrids and microgrid companies with its tax incentives. It includes a 10-year extension of production and investment tax credits for renewable energy generation and fuel cells. The tax credit is also now offered for energy storage, which is crucial for microgrids. Extending tax credits that are currently in the process of being phased out would provide a significant boost to renewable energy. Producers and consumers of these products would potentially receive greater confidence in long-term decisions that favor rapid growth in clean energy.
The provisions of the legislation that could provide the largest benefit to renewable energy, microgrids, and companies who provide solutions like solar controllers and energy management software, allow for a direct-pay alternative to the tax credits. CleanSpark CEO Zach Bradford states, “The inability to fully realize the tax benefits in the form of credits in the past has stalled or killed otherwise viable projects.” Direct pay would allow developers or purchasers of renewables to treat tax credits like the Investment Tax Credit (ITC) and Production Tax Credit (PTC) as an overpayment of taxes, which monetizes the credits as cash refunds from the IRS after filing their annual tax returns. This in theory would allow anyone regardless of their tax situation to take advantage of the tax credits.
More so, the plan currently allocates $50 billion to improve infrastructure in communities vulnerable to climate-driven disasters. Microgrids are not specifically mentioned but a portion of funding would be expected to increase spending for FEMA’s BRIC program. The Building Resilient Infrastructure and Communities (BRIC) program provides resources for microgrid development. This would help disaster-prone communities develop independence from the traditional grid and create more backup power sources in case of an emergency.
The legislation put forth by Senators Carper, Heinrich and Whitehouse are widely appreciated by the clean energy sector and future employees. No plan is perfect, but the Save America’s Clean Energy Jobs Act has many benefits for companies like CleanSpark who will make the extra effort to utilize them. Meanwhile, we encourage regulators to guard against the potential of inefficient utilities who have a vested interest in remaining monopolies rather than pushing for efficient change. CleanSpark does believe that no one can discount the ingenuity of the American entrepreneur and the willingness to create a positive impact.