On Dec. 9, 2019, Anthony Burt, electrician with the San Diego-based Sullivan Solar Power, inspects an array and battery installation in El Cajon.

On Dec. 9, 2019, Anthony Burt, electrician with the San Diego-based Sullivan Solar Power, inspects an array and battery installation in El Cajon.(Joshua Emerson Smith/The San Diego Union-Tribune/TNS)

It looks like solar, electric vehicles and energy storage got lumps of coal in their stockings as members of Congress, looking to escape Washington D.C. before Christmas, finish off a $1.37 billion budget package that will fund the government through 2020.

The solar industry lobbied for a reprieve from step-downs in the federal investment tax credit that begins Jan. 1, car makers Tesla and GM wanted legislation to raise the cap on eligibility for federal deductions on electric cars, and backers of storage hoped the government would establish a tax credit regime for their sector.

But late Monday night, a final spending deal shut out all three segments.

Wind power fared somewhat better, wrangling one extra year of incentives from the domestic portion of a pair of spending bills that passed the House of Representatives Tuesday and moved on to the Senate, where it is expected to be approved. The White House has indicated President Donald Trump will sign the deal into law, thus avoiding a potential government shutdown.

"Given bipartisan support for tax incentives for energy storage, offshore wind, electric vehicles and other critical clean energy priorities, this outcome is deeply disappointing," said Gregory Wetstone, CEO of the American Council on Renewable Energy, in a statement. "This is not the time to be kicking the climate can down the road."

Since 2005, the federal government has offered a 30% tax credit on solar installations, including residential rooftop and commercial systems. But starting in 2020, the credit drops to 26% and then falls to 22% in 2021. In 2022, the credit goes away completely for residential customers. For commercial solar installations, the credit will drop to 10% in 2022, where it is scheduled to remain.

Brad Heavner, policy director at the California Solar and Storage Association, said the solar shutout represented a "huge missed opportunity."

"Solar activity in California has leveled off," Heaver said. "We grew a lot for several years and it's been pretty level for the past three or four years and as we aim to hit our climate goals, we need to get that trend upward again."

Producers of energy storage systems, such as lithium-ion batteries, wanted to establish a standalone federal tax credit framework for their sector but they were turned back. Storage will continue to receive a tax credit only when paired with a solar installation.

"Taking energy storage from a nascent technology to a mainstream technology, there's just a long way to go," Heavner said. "There is a state rebate program but the boost we need to get it to a mainstream market is just really big."

Buyers of electric vehicles, or EVs, are eligible to receive up to $7,500 in a federal tax credit. But after a carmaker has sold more than 200,000 EVs and plug-in hybrids, the tax credit begins to phase out and eventually dries up completely.

Tesla, buoyed by deliveries of its Model 3, will be completely out of tax credits by the end of this month while GM, thanks to sales of the Chevy Bolt, will exhaust its tax credits by March. Both carmakers supported a legislative draft to lift the cap from 200,000 vehicles sold to 600,000 (while reducing the tax credit by $500) but the proposal did not make it into the final bill.

California has set a goal of having 5 million EVs on the state's roads by 2030. As of Oct. 7, there are 655,088 plug-ins in the Golden State.

Tesla did not respond to an email from the Union-Tribune asking for a comment. In a statement to Wired, a GM spokeswoman called the failure to extend the tax credit a "missed opportunity to further advance electrification in the U.S."

Brett Williams, senior adviser for EVs at the Center for Sustainable Energy in San Diego, said 54% of recent EV buyers in California rated the federal tax credit as "extremely important" when making their purchases.

"Although we're adding more EVs to the road, we're also moving from enthusiastic early electric vehicle adopters to more skeptical, more mainstream consumers who actually need a little bit more of a nudge ... to get them off the fence and join the electric vehicle market," Williams said.

The federal government offers a tax credit for wind farms, using a complicated formula based on generation per kilowatt-hour. However, the credit is stepping down. Under current law, wind projects had to begin construction by the end of this year and be up and running by 2021 to receive the last available level of credit.

But under the deal hammered out this week, a one-year extension of the tax credit was tacked on for wind farms to begin construction - although they still have to be operational by 2021.

The extra year will help develop more onshore wind projects but will do no good for proposed offshore wind farms in California because, even if they win approval, would-be projects off the coast of Morro Bay and Eureka are not expected to be operational by 2021.

An analysis conducted in late 2016 by the National Renewable Energy Laboratory looked at the coastline of California and estimated the potential for offshore wind energy is enough to produce about 1.5 times of the state's energy consumption, based on 2014 numbers.

A big winner in tax credit package is the biodiesel industry, where producers recycle products such as cooking oil and convert them into diesel fuel. Under the agreement, a $1-a-gallon tax credit that expired in 2017 will be revived retroactive to 2018 and extend through 2022 for biodiesel and renewable biodiesel production.

A tax credit was also extended through 2020 for producers of cellulosic ethanol, a renewable fuel made from plant fibers such as corn cobs, husks, leaves and stalks from corn fields.

Sen. Charles Grassley, R-Iowa, fought to bring back the biodiesel credit. He's also the chairman of the Senate Finance Committee and Iowa produces more corn than any other state.

Eight plants in California produce biomass-based diesel products, accounting for about 40 million gallons of in-state production in 2015.

"We're hoping (the extension) will provide some much-needed stability for our company and for the industry in general," said Danielle Brannan, executive vice president at New Leaf Biofuel, a Barrio Logan-based company that collects used cooking oil collected from local restaurants and turns it into fuel.

"We're in the middle of an expansion right now," Brannan said. "We're going from 5 million to 12 million gallons a year and we've been working on this project with a kind of 'if you build it, they will come' mentality and this will definitely help us."

Fiscal hawks complained the tax credit extensions amounted to the government picking winners and losers and criticized reviving credit programs that had already been eliminated, calling them "zombie tax extenders."

"We'll see what the Senate and ultimately President Trump do," said Katie Tubb, senior policy analyst at the Heritage Foundation, a conservative think tank based in Washington. "But it's disappointing that Congress is poised to yet again break its promises and increase tax burdens on the American people for the sake of subsidizing their politically preferred energy technologies."

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