A power-generating wind turbine is reflected in solar panels. The Trump administration extended tax breaks for both solar and wind projects on Thursday. Reuters
A power-generating wind turbine is reflected in solar panels. The Trump administration extended tax breaks for both solar and wind projects on Thursday. Reuters
A power-generating wind turbine is reflected in solar panels. The Trump administration extended tax breaks for both solar and wind projects on Thursday. Reuters
A power-generating wind turbine is reflected in solar panels. The Trump administration extended tax breaks for both solar and wind projects on Thursday. Reuters

Energy

Trump administration extends tax breaks for renewables projects

Tax credits worth 2.5 cents per kilowatt hour extended for both wind and solar schemes

Reuters

May 28, 2020

  • English
  • Arabic

The Trump administration is giving solar and wind energy projects more time to qualify for generous federal tax credits, delivering a reprieve to renewable energy developers struggling with delays caused by the novel coronavirus pandemic.

The move was welcomed by wind and solar advocates, who have been lobbying since March for federal help to avoid project setbacks and to keep financing flowing. The tax credits have been critical to making renewable energy competitive with electricity from fossil fuels.

Late on Wednesday, the Internal Revenue Service issued a notice saying it would give wind projects started in 2016 or 2017 an additional year, until the end of 2021, to bring their projects online and still qualify for a tax credit for every kilowatt-hour of electricity produced.

The credit is worth 2.5 cents per kWh for projects started in 2016 and 2 cents per kWh for those that began in 2017, stepping down further in subsequent years. Developers must show there is continuous construction in order to claim the level of credit available in the year they broke ground.

For solar, companies that paid for equipment in late 2019 but were unable to take delivery of it within a three-and-a-half-month deadline now have until October 15 of this year to qualify for the sector's highest level of subsidy.

The solar tax credit was worth 30 per cent of the value of the project in 2019 for projects that started construction that year. It dropped down to 26 per cent this year.

The full subsidy was available to firms that spend 5 per cent of a project's capital cost by the end of 2019.

While renewable energy lobbying groups cheered the deadline extensions, they said they still would like to see Congress allow the credits to be converted to cash.

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Neighbourhood Watch

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Notable salonnières of the Middle East through history

Al Khasan (Okaz, Saudi Arabia)

Tamadir bint Amr Al Harith, known simply as Al Khasan, was a poet from Najd famed for elegies, earning great renown for the eulogy of her brothers Mu’awiyah and Sakhr, both killed in tribal wars. Although not a salonnière, this prestigious 7th century poet fostered a culture of literary criticism and could be found standing in the souq of Okaz and reciting her poetry, publicly pronouncing her views and inviting others to join in the debate on scholarship. She later converted to Islam.

 

Maryana Marrash (Aleppo)

A poet and writer, Marrash helped revive the tradition of the salon and was an active part of the Nadha movement, or Arab Renaissance. Born to an established family in Aleppo in Ottoman Syria in 1848, Marrash was educated at missionary schools in Aleppo and Beirut at a time when many women did not receive an education. After touring Europe, she began to host salons where writers played chess and cards, competed in the art of poetry, and discussed literature and politics. An accomplished singer and canon player, music and dancing were a part of these evenings.

 

Princess Nazil Fadil (Cairo)

Princess Nazil Fadil gathered religious, literary and political elite together at her Cairo palace, although she stopped short of inviting women. The princess, a niece of Khedive Ismail, believed that Egypt’s situation could only be solved through education and she donated her own property to help fund the first modern Egyptian University in Cairo.

 

Mayy Ziyadah (Cairo)

Ziyadah was the first to entertain both men and women at her Cairo salon, founded in 1913. The writer, poet, public speaker and critic, her writing explored language, religious identity, language, nationalism and hierarchy. Born in Nazareth, Palestine, to a Lebanese father and Palestinian mother, her salon was open to different social classes and earned comparisons with souq of where Al Khansa herself once recited.

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