President Obama just unveiled a $3.99 trillion budget for 2016 that asks Congress for a permanent extension of tax credits for the solar and wind industry.

The current policy, which includes an expiration of tax credits in 2017, is encouraging a boom in solar installations this year and next. But 2017 will see a collapse in utility solar -- along with some retrenchment and uncertainty in commercial and residential solar markets.

In a section titled "Improving Incentives for Research and Clean Energy," the 2016 budget proposal includes a request for $7.4 billion for clean energy technologies, along with a shopping list of funding and incentives for the renewable sector and nuclear power industries.

Although the Republican-controlled Senate and House will not approve this budget or enact permanent extensions of the tax credits, the proposal signals that the administration will support some preservation of the solar Investment Tax Credit (ITC) and the wind power Production Tax Credit (PTC). The ITC, a tax credit of 30 percent of the cost of solar installations, is slated to step down to 10 percent at the end of 2016. 

The rhetoric and scale of these requests set a negotiating stance for the administration for when the actual budget sausage gets made. A potential compromise might see projects started before the end of 2016 get "grandfathered in," or result in a more gradual stepdown of the ITC. The PTC negotiations will be part of a larger tax extenders bill coming up later this year. The ITC is expected to remain intact into 2016 when it would come up as part of a tax-reform effort.

U.S. DOE programs and highlights of the 2015 budget request

The U.S. Department of Energy provides about 75 percent of the clean energy technology funding. The 2016 request is a 9 percent increase over 2015 levels.   

Here are the DOE programs named in the budget request:

  • Grid Modernization: $356 million
  • Supercritical CO2: $44 million to establish a 10-megawatt scale pilot Supercritical Transformational Electric Power facility
  • Subsurface Engineering: $244 million for new wellbore systems, seismic research
  • Energy-Water Nexus: $38 million to increase efficiency of these connected resources
  • Exascale Computing: $273 million 
  • Cybersecurity: $305 million to improve the cybersecurity of the DOE and the energy sector

Some other budget highlights:

  • $4 billion for The Clean Power State Incentive Fund: Money to support states exceeding the minimum requirements that were established in the Clean Power Plan
  • $2.72 billion for energy efficiency
  • $325 million for the Advanced Research Projects Agency, including R&D for transformational clean energy technologies
  • $907.6 million for nuclear energy for R&D in advanced reactor and fuel cycle technologies, as well as technical support for the licensing of small modular reactors
  • $560 million for fossil energy R&D to advance carbon capture and storage and natural gas technologies
  • $270.1 million for electricity delivery and energy reliability grid modernization activities
  • $257 million for the Strategic Petroleum Reserve to operate and increase the system’s durability and reliability
  • $5.34 billion for Science to continue to lead basic research in the physical sciences
  • $8.8 billion for weapons activities to ensure a safe, secure, and effective nuclear stockpile, and sustain nuclear security R&D
  • $1.9 billion for nuclear nonproliferation to continue to reduce global stocks of weapons-useable nuclear materials
  • $5.8 billion for environmental management to "address the legal and moral obligations to clean up the legacy of the Cold War."

Non-energy related budget requests include:

  • $60 billion over ten years for students to attend community college for free
  • $478 billion over six years for surface transportation improvements
  • $146 billion for research and development
  • $5 billion in start-up funding for technology manufacturing
  • $1.5 billion in additional funds for Head Start early childhood education