THE SENATE

S.B. NO.

2556

THIRTIETH LEGISLATURE, 2020

S.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO ENERGY.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The legislature finds that as a result of pursuing its goal to reach one hundred per cent renewable energy by 2045, Hawaii must continue to support utility-scale renewable energy projects that benefit residents and ratepayers.  Currently, there are sixty utility-scale renewable energy projects feeding into the State's power grids, and many more are projected for completion in the next several years.  Despite great progress, the State continues to depend heavily on imported petroleum for its energy needs, and it must support a stable and robust financial framework for renewable energy projects to reach the State's ambitious renewable energy goals.

     The legislature further finds that in order to continue to support this goal, the State must distinguish utility-scale renewable energy projects from other renewable energy technology systems under the tax credit program.  Under the terms of the public utilities commission order 35286, which authorized a solicitation for utility-scale renewable energy projects in 2018, bidders were required to pass through the full value of the tax credit to ratepayers in the form of lower power prices.  Eight projects totaling approximately two hundred seventy-five megawatts alternate current were selected in this solicitation, with expected completion dates between 2021 and 2022.  These eight projects are essential to Hawaii's ability to meet its near-term clean energy and carbon reduction goals.  However, while the projects' power prices assume the full value of the tax credit as of the time of bidding, the projects will not secure the tax credit until they are completed and energized.  Without certainty as to the value of the tax credit, these projects would need to take on the full risk of a reduced or eliminated credit as they secure financing and complete construction, placing the projects at risk of cancellation.  Providing certainty for these projects is necessary to ensure their financial viability and keep the State on track to achieving its clean energy goals.

     Accordingly, the purpose of this Act is to:

     (1)  Define an "eligible utility-scale renewable energy project" for purposes of a renewable energy technologies income tax credit available to commercial solar energy systems;

     (2)  Clarify the calculation of the renewable energy technologies income tax credit available to commercial solar energy systems;

     (3)  Provide that the value of the renewable energy technologies income tax credit for eligible utility-scale renewable energy projects shall be based on the credit value and cap that are in effect as of July 1, 2020; and

     (4)  Provide that an eligible utility-scale renewable energy project shall not be eligible to collect the tax credit if they entered into a contract after December 31, 2018.

     SECTION 2.  Section 235-12.5, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsections (b) and (c) to read:

     "(b)  The amount of credit allowed for each eligible renewable energy technology system shall not exceed the applicable cap amount, which is determined as follows:

     (1)  If the primary purpose of the solar energy system is to use energy from the sun to heat water for household use, then the cap amounts shall be:

          (A)  $2,250 per system for single-family residential property;

          (B)  $350 per unit per system for multi-family residential property; and

          (C)  $250,000 per system for commercial property;

     (2)  For all other solar energy systems, the cap amounts shall be:

          (A)  $5,000 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;

          (B)  $350 per unit per system for multi-family residential property; and

          (C)  $500,000 per [system] megawatt direct current for systems installed on commercial property; and

     (3)  For all wind-powered energy systems, the cap amounts shall be:

          (A)  $1,500 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;

          (B)  $200 per unit per system for multi-family residential property; and

          (C)  $500,000 per system for commercial property.

     (c)  For the purposes of this section:

     "Actual cost" means costs related to the renewable energy technology systems under subsection (a), including accessories and installation, but not including the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system and costs for which another credit is claimed under this chapter.

     "Eligible utility-scale renewable energy project" means a renewable energy project that was selected prior to December 31, 2018, under the Hawaiian Electric Companies' final variable renewable dispatchable generation request for proposal pursuant to public utilities commission order number 35286, docket 2017-0352, and that is placed in service no later than December 31, 2023.

     "Household use" means any use to which heated water is commonly put in a residential setting, including commercial application of those uses.

     "Renewable energy technology system" means a new system that captures and converts a renewable source of energy, such as solar or wind energy, into:

     (1)  A usable source of thermal or mechanical energy;

     (2)  Electricity; or

     (3)  Fuel.

     "Solar or wind energy system" means any identifiable facility, equipment, apparatus, or the like that converts solar or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation."

     2.  By amending subsection (k) to read:

     "(k)  This section shall apply to eligible renewable energy technology systems that are installed and placed in service on or after July 1, 2009[.]; provided that for an eligible utility-scale renewable energy project, the tax credit shall be based on the credit value and cap that were in effect as of July 1, 2020; provided further that an eligible utility-scale renewable energy project shall only be eligible to receive the tax credit pursuant to subsection (b)(2)(C) if they have a power purchase agreement that is either approved by a decision or order by the public utilities commission or has filed with, or is pending approval from, the public utilities commission prior to December 31, 2019."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2019.

 


 


 

Report Title:

Renewable Energy Technologies; Income Tax Credit; Eligible Utility-scale Renewable Energy

 

Description:

Defines an "eligible utility-scale renewable energy project" for purposes of a renewable energy technologies income tax credit available to commercial solar energy systems.  Clarifies the calculation of the renewable energy technologies income tax credit for commercial solar energy systems.  Provides that the value of the renewable energy technologies income tax credit for eligible utility-scale renewable energy projects shall be based on the credit value and cap that are in effect as of 7/1/2020.  Provides that an eligible utility-scale renewable energy project shall only be eligible if they have a power purchase agreement that is either approved by a decision or order by the Public Utilities Commission or has filed with, or is pending approval from, the Public Utilities Commission prior to 12/31/2019.  (SD1)

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.