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Why Policy Matters - Renewable Energy Market Momentum at Risk

Why Policy Matters

Effective policies such as the Production Tax Credit (PTC) and Investment Tax Credit (ITC) have been instrumental in motivating capital and driving growth in the renewable energy sector. These policies helped the sector attract more than $350 billion in investments since 2004 while enabling the rapid scale up of the renewable energy industry which has led to substantially lower costs. Unlike other energy policies however, the PTC and ITC are temporary and require periodic reauthorization. The uncertainty surrounding the continuation of these policies adversely affects the markets and puts further growth at risk.

This report presents market data demonstrating the effects of this policy uncertainty. The report specifically notes that new wind installations are forecasted to fall 73%, to 2.3 GW in 2017, due to inaction on the Production Tax Credit (PTC). Additionally, the Investment Tax Credit (ITC) is scheduled to decrease from 30% to 10% in 2016 for commercial solar systems and will expire altogether for residential solar systems. The report finds that this ITC step down and expiration is forecast to cut solar installations by almost 50% and is already affecting the market. These steep drop offs – market cliffs, can be avoided by the extension of current tax policies; however, year-long extensions do not provide the optimal policy certainty needed to ensure continued investment in the sector.

This report makes the case for the continuation of these effective policies, along with the adoption of new policies, to provide market certainty and continue to motivate capital investment in the sector.

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Reallocating Energy Investments? Consider the Clean Energy Sector

Reallocating Energy Investments June 2015Today, Clean Energy is an established sector, continues to grow, and offers an increasingly diverse set of investment options that can address a broad spectrum of investor objectives and portfolio allocation targets.

As a result, a growing number of investors are seeking to rebalance their investments to optimize long-term portfolio performance, address future financial risks associated with being over-weighted to the fossil fuel sector, and capitalize on investment opportunities that offer attractive returns and are aligned with the trend towards a less-carbon intensive economy

This paper explores new options for optimizing an energy portfolio, outlines both private and public Clean Energy investment alternatives, analyzes options for addressing sector exposure risks by increasing Clean Energy investments, and offers several conclusions for institutional investors to consider as they invest in today’s energy. 

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New York Green Bank Letter

Comments provided to New York’s Public Service Commission. Provided in response to the New York Green Bank’s request to release the second tranche of funding to complete the capitalization of the green bank.

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Renewable Energy Finance, Market & Policy Overview

This detailed market overview aggregates the numerous policy mechanisms affecting renewable energy projects in the U.S. and provides an analysis of the impact these policies have had on private sector investment in the industry. The paper also looks at innovative financing mechanisms the industry has recently developed including Securitization, YieldCo, and Green Bonds.

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MACRS Depreciation and Renewable Energy Finance

The Tax Code’s current depreciation system – known as MACRS – is essential in driving private sector investment for the renewable energy industry. The paper illustrates the importance of MACRS to renewable energy development and the negative impact on the industry should MACRS be eliminated or radically scaled back.

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Clean Energy Policy Driving Private Capital Investment

The renewable energy market experienced record level growth in 2012, accounting for more than 49% of all new power generation capacity in the U.S. This trend leads to dramatic cost reductions as deployment increases. This paper provides an overview of market trends in the past several years, and illustrates the importance of federal and local policy support of the renewable energy industry.

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Paid in Full An Analysis of the Return to the Federal Taxpayer for Internal Revenue Code Section 48

The Federal Investment Tax Credit (ITC) program for solar projects has sharply accelerated the growth of the U.S. solar industry while providing a positive return to taxpayers.  This paper seeks to analyze the economics of the expanded ITC program and demonstrate the potential return for the government.  Moreover, it discusses the ancillary benefits of the program, including job creation, lessened dependence on fossil fuel, and improved public health.

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A Program of The American Council On Renewable Energy

A Program of American Council On Renewable Energy

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