Congress should maintain Inflation Reduction Act clean energy tax credits to provide utilities with certainty about their investment decisions, Todd Brickhouse, CEO and general manager of Basin Electric Power Cooperative, said during a House hearing on Wednesday.
“The immediate removal of [the production tax credit] will not allow utilities to plan for and avoid increased costs, and this will also immediately harm ratepayers,” Brickhouse said during a hearing held by the Energy and Commerce Committee’s subcommittee on energy on the challenges of responding to rising demand growth.
Basin Electric, a generation and transmission wholesale cooperative based in Bismarck, North Dakota, is building 1,500 MW of solar, partly based on the assumption the capacity would be eligible for PTCs, according to Brickhouse.
Congressional Republicans are looking for ways to trim federal spending to pay for their budget plans, potentially including changes to tax credits provisions contained in the Inflation Reduction Act.
Rep. Mariannette Miller-Meeks, R-Iowa, said the IRA’s tax credits can help spur the buildout of energy infrastructure to meet growing electric demand.
“Tax incentives like the tech-neutral clean energy credits under [sections] 45Y and 45E, and the 45Q carbon sequestration credit, and the 45X advanced manufacturing credit aim to strengthen American manufacturing capability and reduce the engineering procurement and construction risks that have plagued major energy projects,” Miller-Meeks said. She joined 17 other House Republicans in an Aug. 6 letter to House Speaker Mike Johnson, R-La., supporting the IRA’s tax credits.
Those tax credits are “incredibly helpful in ensuring that we can get those projects built and online in a manner that's affordable for our customers,” said Noel Black, senior vice president of federal regulatory affairs for Southern Co., which owns utilities in the Southeast.
Renewable energy can help meet electricity demand, in part because it can be built relatively quickly, according to Rep. Brett Guthrie, R-Ky., who is the Energy and Commerce Committee chairman.
“Wind and solar is important to this mix,” Guthrie said. “But the problem is, if you incentivize it to the point where people don't build other dispatchable properties, you can't be competitive.”
Grid operators across the United States are facing massive interconnection queues that have slowed the process of bringing new power supplies online, according to Asim Haque, the PJM Interconnection’s senior vice president for governmental and member services.
The Federal Energy Regulatory Commission last month approved a PJM proposal to allow 50 “shovel-ready” projects to enter into a one-time interconnection study to serve as a bridge to when the grid operator has a fully reformed interconnection review process, Haque told the subcommittee.
The process is technology-agnostic; PJM expects nuclear uprates, the restart of a Three Mile Island nuclear unit and energy storage will be among the projects in the Reliability Resource Initiative, according to Haque.
Overall, PJM expects to meet its near-term power supply needs with renewable energy, energy storage and expansions at nuclear and gas-fired power plants, plus demand response, Haque said. Long-term additions likely include gas-fired power plants, he said, noting that PJM believes small modular nuclear reactors are “some years away.”
The U.S. needs more natural gas infrastructure, according to Southern Co.’s Black. “The reality is clear, infrastructure, particularly natural gas infrastructure, is required now to meet the rising demand — pipelines, transmission systems, generation capacity,” he said.
However, a “hasty overbuild” of gas-fired generation could stifle private investment in advanced nuclear, geothermal and other technologies, according to Tyler Norris, a Ph.D. student at Duke University.
“If investors perceive policymakers are tilting the playing field toward gas or are creating excess capacity that substantially suppresses capacity prices, they may be reluctant to commit to these higher risk, long-term investments,” Norris said at the hearing.
In the near term, the U.S. should look for ways to bring resources online more quickly, potentially using the Electric Reliability Council of Texas’ “connect-and-manage” interconnection process as a model, Norris said. Also, large loads such as data centers could take advantage of existing excess grid capacity if they are able to curtail their operations during relatively brief periods of grid stress, he said.
