ORIGINAL REPORTING: The Infrastructure Plan Origin Story
Biden's $2.3 trillion infrastructure plan meets power system needs but leaves room for political dealing; The Biden infrastructure spend would rapidly transition the U.S. power sector in ways utilities like, but Congress is expected to seek changes.
Herman K. Trabish, April 28, 2021 (Utility Dive)
Editor’s note: As the Senate finally puts the final version of its infrastructure plan through, it is instructive to look back at what it looked like when it was first proposed almost four months ago.
The Biden administration's $2.3 trillion plan to broadly rebuild U.S. infrastructure and move the power sector to 100% emissions-free electricity by 2035 and the economy to net zero emissions by 2050 aligns with many key utility objectives.
The American Jobs Plan (AJP) proposal to expand renewable energy tax credits, and mandate clean energy and system modernization are the tools utilities need to meet policymaker and customer demand for clean energy, according to Utility Dive's 2021 State of the Electric Utility (SEU) survey. But those proposals are likely to undergo significant changes as Congress addresses those proposals' costs, Washington insiders said.
A $568 billion, five-year Republican plan was announced April 22 by Sen. Shelley Moore Capito, R-W.Va., ranking member of the Environment and Public Works Committee. The legislative process will determine the plan's final proposals, costs and impact because "the devil is in the details," power sector analysts and Congress-watchers said.
Most Capitol Hill analysts expect three Biden provisions to be approved, said Norton Rose Fulbright Law Firm Co-Head of Projects Keith Martin, a veteran renewables finance consultant: a new tax credit for energy storage; a 10-year extension of current renewables tax credits; and a "direct pay" revision that would allow tax credits to be used like cash by utilities and others without any tax liability, such as public power utilities.
But if the AJP's Energy Efficiency and Clean Electricity Standard passes and direct pay allows more utilities to use tax credits for wind, solar and other renewable resources, "studies show the annual U.S. demand for new renewables could reach 60 GW or more," said Energy Innovation (EI) Director of Electricity Policy Michael O'Boyle. "Last year's 35 GW is the record, so that new demand offers opportunities for both utilities and independent developers."
Concern about cost is real, but the 22 U.S. "billion-dollar weather and climate disasters" last year caused $95 billion in damages, and power outages cost the U.S. economy up to $70 billion annually, a White House AJP Fact Sheet said. Federal spending aligned with utility needs can help pay for a transition now rather than waiting for the climate crisis to make it inevitable, analysts and utility leaders said… click here for more