California’s tax code is making it more expensive to build new renewable energy projects — and could drive up electricity bills that are already among the highest in the nation.
Under the 2022 Inflation Reduction Act, developers of clean energy projects could sell the tax credits to other parties, such as large corporations or banks as a way to leverage those benefits to improve financing. That law also stated that under the federal tax code, those sales wouldn’t be taxed.
While most states either automatically adjusted their tax code or did so through legislation, California and four other states did not. That means that as developers put together large wind, solar, storage and other projects in the Golden State, they face an unexpected tax bill.
According to a new analysis from the American Clean Power Association shared with E&E News, that extra cost can be passed down to consumers on electricity bills. If the state aligned with the federal government and did not tax the clean energy credits, Californians could see bills as much as 3 percent lower by 2040, according to the analysis prepared by consulting group E3.
