Energy LawCOVID-19: Renewable Energy Law and Policy

March 31, 20200

The renewable energy industries lobbied to get assistance in the latest federal stimulus package.  The assistance language was included in the stimulus bill as drafted in the House previously. Review of the stimulus package reveals that the lobbying failed and energy law and policy in the U.S. will keep with the status quo.


The Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) stimulus bill was passed by the House of Representativesdespite some attempts to delay the vote. It already passed in the Senate 96-0. The bill was sent to President Trump to sign. It is clear that the bill does not contain energy law and policy provisions.

The CARES Act will not include the extension of the current tax credit incentives for wind and solar energy projects and provisions for direct payment of these tax credits to developers in these industries. This may affect businesses’ ability to construct these projects at a cost that makes economic sense to them. It may also affect individuals seeking to take advantage of tax credits as well. The tax credits for energy law and policy projects expire at the end of this year. Tax credits have been relied on for financing large projects in the offshore and onshore wind and solar industries.

Global supply chain concerns have delayed these projects as well, which is why the industry sought the tax incentives extension. Many in the industry have stated that COVID-19 may put the renewable energy industries in “crisis.”

Project Delays

The delays in permitting and construction processes, supply chain issues, and labor shortages will likely force many of these projects into 2021 and beyond. The industries say delays affect the financial viability of many developers’ projects, particularly for offshore wind. The projects will also be delayed by supply chain issues in various countries and businesses. The industries say that additional investments could be compromised as well. It is unclear at this time whether their requests for assistance will be addressed in any further stimulus legislation. But, another option is to determine whether the current projects are sheltered by “excusable disruption” caused by COVID-19 under the Production Tax Credit and Investment Tax Credit regulations, another potential energy law and policy strategy.

State Impacts

In Rhode Island, the Qualified Jobs Tax Credit program has already drawn GEV Wind Power and Boston Energy, two offshore wind turbine maintenance companies, to make R.I. their headquarters. While some work has been done to create a local supply chain for offshore wind, that work has not been completed. These businesses, as well as local suppliers and maintenance workers, rely on the continued growth of the industry in R.I. as well as state energy law and policy related to these fields, all of which is now on hold.

The solar industry has also been working to gain assistance from the states. Industry looked within to keep projects viable. There is an effort to change energy law and policy in Minnesota by increasing the solar incentives budget. South Texas Solar Systems in San Antonio is offering discounts for new residential solar customers. In California, SunPower announced cuts to executives’ salaries to assist the company amidst the uncertainty due to COVID-19.

Sector Disruption

Some of the issues above extend into the real estate, aviation, and maritime economic sectors as well. Global supply chain disruptions result in a number of other projects under delay or being cancelled. Examples are home building, home sales, procurement contracts, and shipping contracts. Loan defaults will likely soar, leading to difficulties in mortgage, aircraft, and ship financing. All of these impacts will lead to a much higher number of disputes in which contractually and/or financially committed parties will likely attempt to escape commitments. Changed financial and logistical circumstances caused by COVID-19 may form the basis for these actions.

If you need to speak with an attorney about potential impacts to your wind or solar projects, or contractual obligation concerns, get in touch with us today. Our attorneys are working remotely and can be reached by email or phone at 401.477.0023 during regular business hours. Call us today!

Leave a Reply