Changing federal tax credits to direct payment would incur no added government cost, help advanced energy companies keep projects moving forward, and preserve jobs of workers needed to drive economic growth after the crisis
WASHINGTON, D.C., April 16, 2020 – National business group Advanced Energy Economy (AEE) today released a new fact sheet detailing the impact of COVID-19 restrictions on advanced energy companies across the country and calling for a shift of federal tax credits to direct payment as a no-cost solution to aid the industry. This fact sheet – a follow-up to an open letter sent to Congress and the White House on March 26 – is based on a new survey of AEE member companies that demonstrates worsening impact on the full range of renewable energy, energy efficiency, energy storage, grid services, and electric vehicle businesses that make up the broad advanced energy industry.
“With projects delayed or canceled and programs suspended, advanced energy businesses of all types report sharp drops in revenue and no benefit from federal relief actions taken to date,” said Nat Kreamer, CEO of AEE. “Allowing for direct pay, instead of existing tax credits, is a no-cost way to help the industry save projects from cancellation now and preserve jobs for workers who will be needed to jump-start the economy tomorrow.”
The AEE fact sheet comes on the heels of a report from BW Research Partnership that more than 100,000 advanced energy workers lost their jobs in March, wiping out all of last year’s growth. Including temporary unemployment and underemployment, nearly 400,000 advanced energy workers have already been impacted. Job losses are projected to exceed 500,000, or 15% of 3.6 million total advanced energy employment, if nothing is done to support the industry, according to the report.
Based on a new survey of member companies, the AEE fact sheet shows the following impacts:
- 92% of companies said that Federal Reserve loans have not helped their business.
- 84% of companies have had to stop or delay projects.
- 48% of companies have had customers or clients cancel or delay projects through force majeure contract clauses.
- 40% of companies have seen 26% to 50% decline in sales compared to projections.
- 60% indicated that federal stimulus packages have not helped their business.
Advanced energy companies noted numerous reasons for why the industry is facing challenges during this crisis, including:
- Lack of face time with potential customers, which harms business development
- Inability to access homes and commercial buildings to install energy efficiency upgrades or distributed energy resources
- Inability to engage landowners, perform siting for projects, and complete permitting
- Delay or cancellation of public meetings by local officials, which delays projects
- Construction crews are unable to access worksites
Here are comments from individual advanced energy companies:
- An energy efficiency company: “In most states, primarily New York, New Jersey, and California, we have stopped all work. In the Midwest and Southeast, we are on a limited work schedule. We are a pay for performance-based business, and we rely 100% on the implementation of projects for cost recovery and revenue. The current state definition of nonessential has caused us to stop all work.”
- An EV charging business: “A number of construction projects have been significantly delayed; the city of San Francisco has ordered all EV charging construction projects stopped. A number of permitting agencies – in California, Virginia, and elsewhere – are either closed or have told us to expect 30-90-day delays on permitting.”
- An energy storage and EV charger business: “Our businesses are dependent upon access to customer sites, which may not be available either due to a work closure/reduction or because the owner/operator of the facility wants to limit external contact/activity at their premise for the time being.”
As stated in the fact sheet, there is a simple, no-cost measure that Congress could enact now to ensure that projects facing disruption and delay ultimately go forward – direct payment of federal incentives for advanced energy development.
Under current law, installations of solar, wind, battery storage, fuel cells, and other advanced energy technologies receive support in the form of federal tax credits, which are used to finance development. In the current economic situation, the few banks that control the tax equity market have essentially stopped awarding companies these tax credits. As a result, anticipated projects get placed on hold or even canceled, jobs are lost, and companies face a major risk of closure, while consumers and businesses pay more for energy.
In this most recent survey, 60% of advanced energy companies said that a change of federal tax credits to 100% direct pay would help their business.
“Direct pay won’t solve all the problems facing advanced energy companies as a result of COVID-19,” said Kreamer. “But it is a no-cost step Congress can take to stabilize advanced energy companies so they survive today and thrive tomorrow.”
About Advanced Energy Economy
Advanced Energy Economy (AEE) is a national association of businesses that are making the energy we use secure, clean, and affordable. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. AEE’s mission is to transform public policy to enable rapid growth of advanced energy businesses. Engaged at the federal level and in more than a dozen states around the country, AEE represents more than 100 companies in the $238 billion U.S. advanced energy industry, which employs 3.6 million U.S. workers. Learn more at www.aee.net, track the latest news @AEEnet.