Republican leaders of key financial panels in the House and Senate are seeking an expanded review of renewable energy tax credits being received by companies in both the utility-scale and rooftop solar business.
In letters that were sent out this month, certain energy companies that receive renewable energy credits for solar power are asked to turn over certain additional information by Wednesday, Oct. 12
The Senate Finance Committee’s inquiry, which began in March, has found that the Treasury Department and Internal Revenue Service (IRS) lack adequate controls over the administration of green energy incentives, including the Treasury Department’s Section 1603 cash grant program and related investment tax credits, according to a background paper provided by the panel. The House Ways and Means Committee is also involved in the effort.
This inquiry has led to an expanded look into the largest recipients of these dollars, including utility and residential solar energy firms and related investment entities (financing funds in residential solar, yieldcos in utility solar). The inquiry has also raised questions about the use of tax loss insurance to protect tax equity investors against the risks of “over-claims” of energy incentives.
Finance Committee Chairman Orrin Hatch (R-Utah) and House Ways & Means Committee Chairman Kevin Brady (R-Texas) teamed up to further investigate the companies involved in receiving funding through the program.
With a focus on solar utility and residential firms, the chairmen on Sept.14th sent letters to seven different companies that received 1603 grants. Policy teams examined 10-K financial filings, ongoing Treasury Inspector General (TIG) investigations and the corporate practice of firms that received Section 1603 grant monies. The companies receiving letters represent a sample of the largest residential solar companies under TIG investigation and a variety of utility companies that received funds under the program.
Solar utilities identified in the document include NextEra Energy (NYSE:NEE), NRG Energy (NYSE:NRG), SunEdison and Abengoa, SA. Residential solar companies mentioned in the review include SolarCity, Sunrun and Sungevity.
Letters sent to the companies ask them to detail their use of solar energy incentives, third-party financing, and methods of determining cost basis for solar energy properties. The letters also request related financial information. For example, companies are asked to explain the relationship between each corporate parent and any related “yieldco.”
The companies are asked which, if any, subsidiaries have filed for bankruptcy protection in the past three years. SunEdison is one company that’s been involved in a reorganization.