Study finds delaying Maryland Clean Energy Jobs Act would be costly
Maryland will lose out on approximately $247 million in federal tax credits between 2019 and 2022 if passage of the proposed Maryland Clean Energy Jobs Act (CEJA) is delayed by one year.
New analysis conducted by the Maryland Solar Energy Industries Association (MDV-SEIA) compared projected federal tax dollars to Maryland under scenarios in which CEJA is passed into law in the current 2019 legislative session vs. delayed a year and passed in 2020 as is currently being considered by Maryland’s legislative leaders.
At the heart of the analysis is the federal solar investment tax credit, or the ITC. The ITC, which is on a schedule to sunset over the next three years, provides a 30% tax credit for solar projects that start construction by the end of 2019. The tax credit is reduced to 26% for projects that start construction in 2020. The tax credit is further reduced to 22% for projects that start construction in 2021 and sunsets for projects that start construction in 2022.
For the typical residential installation, each annual decline in ITC represents $1,200 per Maryland homeowner. And because of the “construction start” requirement that allows a solar project to qualify for the tax rate in the year they started construction, numerous commercial solar farms that start construction in 2019 but come online in 2020 will earn the full 30% ITC, a benefit that accrues directly to the Maryland ratepayer.
The baseline for MDV-SEIA’s analysis is the current stagnant Maryland solar market, with anemic solar additions and hemorrhaging of good paying solar jobs — 800 jobs lost in 2018 alone, representing 15% of Maryland’s homegrown solar industry. CEJA sets the stage for a decade of solar growth in Maryland, ramping up the state’s share of solar from 2.5% under current law to 14.5% by 2028. By delaying passage of CEJA until 2020, Marylanders can expect approximately 464 fewer megawatts of solar constructed in the state through 2022.
Developing 464 fewer megawatts of solar would mean Maryland would lose out on approximately $247 million in federal tax credits between 2019 and 2022 if CEJA is delayed by one year (based on $2/Watt average solar facility cost). Because the delay of CEJA will result in continuation of the current stagnation through the remainder of the full 30% ITC period, most of the approximately 464 MW of solar that will be delayed by one year would have qualified for the full 30% ITC.
For much of the last year and through the current legislative session, Marylanders and a majority of their representatives in the Maryland General Assembly have called for expanding Maryland’s share of renewable energy to 50% via the proposed Clean Energy Jobs Act, or CEJA. Yet despite the clear majority support for the bill, the tens of billions of dollars in economic benefits, including the hundreds of millions in federal tax credits CEJA would bring to Maryland’s economy, and the catastrophic cost of delay both in Maryland’s ailing home-grown solar industry as well as in terms of our state’s environment, some state leaders are considering punting passage of this important legislation to 2020.
Proponents of delay have pointed to a $1 million study of the state’s renewable policies by the state Power Plant Research Program, though the study has been largely discredited due to critical errors and political manipulation. Meanwhile, other independent analysts estimate the total value of CEJA to Maryland’s economy in excess of $10 billion over the next decade. For example, a 2018 study by Daymark Energy Advisors commissioned by Maryland’s Public Service Commission using proprietary data from Maryland’s utilities concluded that just half the volume of solar called for under CEJA would translate to over $4 billion in benefits to Maryland’s economy over the next decade.
News item from MDV-SEIA