Prospects good for geo credit extension

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The Geothermal Exchange Organization (GEO) said that the geothermal heat pump (GHP) industry expressed concern that its heating and cooling technology was excluded from extensions of federal tax credits given the solar industry in Omnibus spending bill passed today by Congress. But the association sees a positive way forward next year.

GHPs currently have a 10% Investment Tax Credit (ITC – under Sec. 48[a] of the tax code) for commercial applications and 30% income tax credit for residential installations (under Sec. 25D) until Dec. 31, 2016. The Omnibus bill extended the solar industry’s tax credits (30% 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,” said GEO President Doug Dougherty.

But GHPs were not alone. As final negotiations were taking place, Republicans wanted to end the U.S. ban on crude oil exports and Democrats wanting to extend a Production Tax Credit for wind and the ITCs and income tax credits for renewables. 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,” said Dougherty. “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 (R-Texas) 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.”

And House Democratic Leader Nancy Pelosi (D-CA) said she has been promised action in early 2016: “We still have some unfinished business there, because the bill, through a drafting error, did not include fuel cells, geothermal, and some other renewables that are part of that tax credit. And we have a commitment that that will happen in an early revue bill after the first of the year,” she told Bloomberg.

“At first blush, GHP exclusion from tax credit extensions in the Omnibus bill looked bad for the industry,” said Dougherty. “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. The message?

“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 said.

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