Trump Administration Imposes Tariffs on Steel and Aluminum

The international trade front has had some important developments over the last few weeks that will likely have significant impacts on the construction of domestic wind, solar, biomass and other types of renewable energy projects. One major development was the announcement of the section 232 steel and aluminum tariffs, where President Trump has informally announced the adoption of the harshest of the remedies recommended by the Department of Commerce – universal tariffs against all products from all companies. As detailed below, the political and business reaction to these tariffs was swift and generally negative (with the not-surprising exception of the aluminum and steel companies and the unions at their plants). Unsurprisingly, these new tariffs will have an impact on the costs associated with any component made with steel or aluminum, such as turbines, racks and tracking systems, and numerous other items, due to the increase in price of steel and aluminum sold in the US.

The details related to the 232 steel and aluminum tariffs are as follows:

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FERC Votes to Encourage Electric Storage

On February 15, 2018, the Federal Energy Regulatory Commission (FERC) voted to require all Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to revise its tariffs to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources.

FERC’s goal is to remove barriers applicable to electric storage resources in the capacity, energy and ancillary services markets operated by RTOs and ISOs.

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Early Morning Budget Deal Brings the Return of Previously Expired Short-Term Tax Breaks

Early this morning, the House and Senate voted to pass a budget deal that included $17 billion in tax provisions, ending a short overnight government shutdown.  The bill (H.R. 1892) extends the investment tax credit (ITC)  to “orphaned” technologies that were not included in the extension of ITC for solar property in 2015. The bill makes ITC available again for fiber optic solar lighting property, qualified fuel cells, micro-turbines, combined head and power systems, small wind energy property and geothermal property, provided construction of such property begins before January 1, 2022. ITC with respect to all  of these technologies is subject to phase-out. ITC is 30 percent if construction begins before January 1, 2020, 26 percent if construction begins in 2020, 22 percent if construction begins in 2021 and zero thereafter. ITC is also completely phased out for property that is not placed in service before January 2, 2024. In addition to the ITC extension, the bill also extends the beginning construction deadline for the production tax credit (PTC) until January 1, 2018, for closed-loop biomass, open-loop biomass, geothermal, landfill gas, municipal solid waste, hydropower and marine and hydrokinetic facilities and extends the election to claim ITC in lieu of PTC until January 1, 2018.

The Senate passed the bill shortly after 2:00 AM EST, with the House following suit around 5:30 AM EST. The bill was signed into law by President Trump later this morning.

201 Trade Case Update: Trump Administration Imposes Tariff on Imported Solar Panels

201 Trade Case Update: Trump Administration Imposes Tariff on Imported Solar Panels

After months of uncertainty, the Trump administration announced on Monday that it is imposing a 30% tariff on imported solar cells and modules, which will step down 5% each year thereafter for a duration of four years. In addition, the first 2.5 gigawatts of imported solar cells are exempted from the tariff each year.

Safeguard Tariffs on Imported Solar Cells and Modules
Year 1 Year 2 Year 3 Year 4
Tariff Increase 30% 25% 20% 15%

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President Trump Signs Tax Cuts and Jobs Act into Law

Today, President Trump signed the $1.5 trillion Tax Cuts and Jobs Act (TCJA) into law, marking the first major overhaul of the U.S. tax code in over 30 years.

As we discussed in our prior blog post here, the TJCA is a mixed bag for the renewable energy industry. On one hand, it cuts the tax rate and provides for 100% expensing for both new and used property. However, on the other hand, it limits interest deductions and includes a complicated new base erosion anti-abuse tax (BEAT) that could claw back tax credits from multinational tax equity investors.