The Power of Change Innovation for Development and Deployment of Increasingly Clean Electric Power Technologies (2016) / Chapter Skim
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7 Policies Supporting Increasingly Clean Electric Power Technologies
7 Policies Supporting Increasingly Clean Electric Power Technologies
Pages 195-210
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From page 195... ...
The chapter then investigates various approaches to lowering the cost of capital and reducing risk to private capital for financing the deployment of increasingly clean electric power technologies. 1 One key approach is to ensure that markets fully account for all costs, including pricing of externalities such as the costs associated with pollution, including oxides of sulfur (SOx)
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From page 196... ...
In 1902, for example, President Theodore Roosevelt set a precedent for federal intervention in the coal industry when a labor strike threatened energy supplies for the entire East Coast. The decision in a 1908 Department of Justice lawsuit against railway companies accused of price manipulation upheld the International Commerce Commission's (ICC)
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From page 197... ...
. The percentage depletion allowance, which still is available to selected taxpayers, is an alternative to cost depletion and is currently available only for domestic production by independent companies up to a maximum of 1,000 barrels per day (or 6 million cubic feet [MMcf]
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. Congress tasked DOE, aided by the new Nuclear Waste Fund, with the collection and storage of spent nuclear fuel, and mandated that DOE create a permanent storage site by no later than January 1998 (Garvey, 2009)
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The PTC for other eligible renewable energy technologies was extended only for construction initiated through the end of 2016 (DOE, n.d.-c)
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. An RPS requires that electric power suppliers 5 use renewable energy or obtain renewable energy credits (RECs)
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. In addition, current tax benefits include excess of percentage over cost depletion (Internal Revenue Code [IRC]
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LOWERING THE COSTS AND RISKS OF FINANCING THE DEPLOYMENT OF INCREASINGLY CLEAN ENERGY TECHNOLOGIES As discussed above, each of the dominant electricity generation sectors, defined by fuel type, has historically been actively supported by government measures in its economic and market development. Beginning in the second half of the 20th century, and in particular following the oil shock and downturn in nuclear development in the 1970s, this pattern of government support took on a new shape.
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From page 203... ...
The public shares pay dividends to the shareholders at attractive yields that are substantially lower than the return generally required by the equity investors in renewable energy projects. The lower yield acceptable to the YieldCo investor is justified because proven operating projects have eliminated some risks (such as cost overruns, construction risk, and operating risk)
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From page 204... ...
Real Estate Investment Trusts Real estate investment trusts (REITs) are another investment vehicle that could lower the costs of and increase access to capital for financing increasingly clean energy technologies.
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From page 205... ...
Enabling Financing Mechanisms One critical challenge to financing increasingly clean electric power technologies is the often high up-front capital costs, even though the technologies may provide lower operating costs. Several mechanisms -- such as on-bill repayment, energy service performance contracting, and property assessed clean energy (PACE)
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From page 206... ...
Thus, another possibility is to offer streamlined syndication assistance to help states design programs in ways that leverage private capital and low-cost financing mechanisms most effectively. ADDRESSING BARRIERS THAT REMAIN AT THE DEPLOYMENT STAGE As detailed in Chapter 2, the greatest historical barrier to the deployment of increasingly clean electric power technologies once they are technically ready 10 is that their price in the market has been higher, often significantly so, than that of conventional energy sources -- a much more significant issue than the costs of capital associated with these technologies.
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From page 207... ...
Market demand would pull from there, and investors would find investing in the deployment of increasingly clean electric power technologies more attractive, accelerating their market deployment. Finding 7-4: Properly pricing pollution would cause market pull for increasingly clean energy technologies and attract more investors and investment capital to these technologies.
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From page 208... ...
Past proposals on revenue allocation have included deficit reduction, clean energy R&D, climate change mitigation and adaptation measures, and compensatory decreases in corporate or personal income taxes (or increases in public assistance to low-income families that do not pay taxes) to mitigate the impact of energy price increases.
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From page 209... ...
remains relevant and an important reference for a renewed national conversation about the most efficient ways to address climate change and to spur innovation in increasingly clean energy technologies.
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