Q1 Looks Bright for Geothermal Tax Credits
Extension of Geothermal Tax Credits Looks Promising
The geothermal heat pump (GHP) industry has expressed concern that its heating and cooling technology was excluded from extensions of federal tax credits given the solar industry in Omnibus spending bill recently passed by Congress, according to the Geothermal Exchange Organization (GEO). In spite of the concern, the association sees a positive way forward in 2016.
GHPs currently have a 10-percent investment tax credit (ITC) for commercial applications and 30-percent income tax credit (PTC) for residential installations until Dec. 31, 2016. The Omnibus bill extended the solar industry’s tax credits (30 percent commercial and residential) with a phase-out to 2022.
“We are very disappointed that GHPs were passed over by Congress for extension our tax credits,” says GEO President Doug Dougherty.
GHPs were not alone though. In their haste to unveil the bill, staffers inadvertently excluded the PTC for geothermal power, and the ITC and income tax credits for GHPs, fuel cells, small wind, microturbines, and combined heat and power.
“I’m happy to report that with the immediate backlash whipped up by the GHP and other industries left out of the tax credit extensions, key congressional staff are well aware of the problem,” Dougherty says. “We have assurances from them that the inequity will be addressed during the first few months of 2016.”
House Ways and Means Chairman Kevin Brady has publicly acknowledged concern that the ITC and income tax credit extensions for solar did not include other eligible technologies, saying, "We'd be glad to revisit that."
House Democratic Leader Nancy Pelosi (D-CA) said she has been promised action in early 2016.
“At first blush, GHP exclusion from tax credit extensions in the Omnibus bill looked bad for the industry,” Dougherty says. “But on further review, we now believe that the situation has created an easier path for us to get 48a and 25D tax credits for GHPs extended to 2022. During the first quarter of the year, our goal is to include GHPs in an amendment that will give us parity with solar industry tax credit extensions. That is the opportunity that we are now focused on going forward.”
In coming weeks, GEO will urge Congress to extend ITC and income tax credits for all eligible technologies.
“Congress should not be in the business of picking winners and losers among renewable energy options. It must remain technology neutral and market sensitive. This is especially important as the nation reaches for lofty environmental and economic goals,” Dougherty says.
GEO is a non-profit trade association representing the interests of the geothermal/ground-source heat pump industry across the U.S. GEO advocates the technology to government, industry and the public, educating leaders about the economic, national security and environmental benefits of geothermal heat pumps for residential, institutional and commercial applications. To learn more, go to www.geoexchange.org.