MDV-SEIA: Maryland Cannot Afford To Delay Clean Energy Jobs Act

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Maryland could lose out on approximately $247 million in federal tax credits between 2019 and 2022 if the passage of the proposed Maryland Clean Energy Jobs Act (CEJA) is delayed by one year, according to new analysis conducted by the Maryland D.C. Delaware Virginia Solar Energy Industries Association (MDV-SEIA).

MDV-SEIA compared projected federal tax dollars under scenarios in which CEJA is passed into law in the current 2019 legislative session vs. delayed a year and passed in 2020, as is currently being considered by Maryland’s legislative leaders.

At the heart of the analysis is the federal solar investment tax credit (ITC), which is on a schedule to sunset over the next three years. It provides a 30% tax credit for solar projects that start construction by the end of 2019, and the credit is reduced to 26% for projects that start construction in 2020. The tax credit is further reduced to 22% for projects that start construction in 2021 and sunsets for projects that start construction in 2022.

For the typical residential installation, each annual decline in ITC represents $1,200 per Maryland homeowner, according to the analysis. And because of the “construction start” requirement that allows a solar projected to qualify for the tax rate in the year it started construction, numerous commercial solar farms that start construction in 2019 but come online in 2020 will earn the full 30% ITC – a benefit that accrues directly to the Maryland ratepayer, says MDV-SEIA.

The baseline for MDV-SEIA’s analysis is the currently stagnant Maryland solar market, with anemic solar additions and hemorrhaging of good-paying solar jobs; 800 jobs were lost in 2018 alone, representing 15% of Maryland’s homegrown solar industry, according to the association.

However, CEJA sets the stage for a decade of solar growth in Maryland, ramping up the state’s share of solar from 2.5% under current law to 14.5% by 2028. By delaying passage of CEJA until 2020, Marylanders can expect approximately 464 fewer megawatts of solar constructed in the state through 2022, according to the analysis.

Developing 464 fewer megawatts of solar would mean Maryland would lose out on approximately $247 million in federal tax credits between 2019 and 2022 if CEJA is delayed by one year (based on a $2/W average solar facility cost). Because the delay of CEJA would result in continuation of the current stagnation through the remainder of the full 30% ITC period, most of the approximately 464 MW of solar delayed by one year would have qualified for the full 30% ITC.

For much of the last year and through the current legislative session, Marylanders – and a majority of their representatives in the Maryland General Assembly – have called for expanding Maryland’s share of renewable energy to 50% via the proposed CEJA. Yet, despite the clear majority support for the bill, some state leaders are considering punting the passage of the legislation to 2020, says the association.

Proponents of the delay have pointed to a $1 million study of the state’s renewable policies by the Power Plant Research Program, though the study has been “largely discredited due to critical errors and political manipulation,” according to MDV-SEIA. Meanwhile, other independent analysts estimate the total value of CEJA to Maryland’s economy in excess of $10 billion over the next decade. For example, a 2018 study by Daymark Energy Advisors – commissioned by Maryland’s Public Service Commission using proprietary data from Maryland’s utilities – concluded that just half the volume of solar called for under CEJA would translate to over $4 billion in benefits to Maryland’s economy over the next decade, adds MDV-SEIA.

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