PEAKER Act of 2021
Bill: S.1553 | Sponsor: Sen. Gillibrand, Kirsten E. (D-NY)
Policy area: Energy

Summary:
Promoting Energy Alternatives is Key to Emission Reductions Act of 2021 or the PEAKER Act of 2021
This bill addresses the emissions from peaker plants and provides financial incentives for renewable energy to reduce the need for peaker plants.
Peaker plants are defined as fossil fuel-fired power plants or units of power plants that are run primarily to meet peak electricity demand. In other words, peaker plants are run where there is above average energy demand, such as during extremely hot or cold weather.
The bill establishes an additional investment tax credit for renewable energy generation and battery storage to replace the need for peaker plants in disadvantaged communities.
In addition, the Department of Energy (DOE) must establish a grant program to provide up to $1 billion annually through FY2032 to eligible entities for clean energy projects. Specifically, grants must be awarded to assist eligible entities in carrying out (1) projects associated with the construction, installation, or acquisition of qualifying renewable energy facilities and qualifying energy storage facilities; or (2) community energy proposals or community energy studies to reduce or replace the need for peaker plants. Entities that are eligible to receive grants include state or local governments, nonprofit organizations, community-owned energy generation facilities or energy storage facilities located in disadvantaged communities, community-based energy cooperatives, or certain partnerships.
DOE must also assess and report on the location of each peaker plant, the quantity and type of pollution each plant is producing, and related data as specified by the bill.

To require the Secretary of Energy to submit to Congress an annual 
 report on peaker plants in the United States and to provide financial 
 incentives for replacing peaker plants with technology that receives, 
 stores, and delivers energy generated by renewable energy resources, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Promoting Energy Alternatives is Key 
to Emission Reductions Act of 2021'' or the ``PEAKER Act of 2021''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Appropriate committees of congress.--The term 
        ``appropriate committees of Congress'' means--
                    (A) the Committee on Finance of the Senate;
                    (B) the Committee on Energy and Natural Resources 
                of the Senate;
                    (C) the Committee on Environment and Public Works 
                of the Senate;
                    (D) the Committee on Ways and Means of the House of 
                Representatives; and
                    (E) the Committee on Energy and Commerce of the 
                House of Representatives.
            (2) Disadvantaged community.--The term ``disadvantaged 
        community'' means a community that--
                    (A) is located in an area with a high concentration 
                of individuals who--
                            (i) are members of low- and moderate-income 
                        households (as defined in section 570.3 of 
                        title 24, Code of Federal Regulations (or a 
                        successor regulation));
                            (ii) experience high levels of 
                        unemployment;
                            (iii) face a high rent burden;
                            (iv) face a high energy burden;
                            (v) have low levels of home ownership;
                            (vi) have low levels of educational 
                        attainment; or
                            (vii) are members of groups that have 
                        historically experienced discrimination on the 
                        basis of race or ethnicity;
                    (B) is burdened by high cumulative environmental 
                pollution or other hazards that can lead to negative 
                public health effects; or
                    (C) is determined to be a disadvantaged community, 
                an environmental justice community, a climate-burdened 
                community, or an otherwise similarly vulnerable 
                community pursuant to any Federal or State-level 
                initiative, including any relevant mapping initiative.
            (3) High energy burden.--The term ``high energy burden'' 
        means, with respect to a household, expenditure of the 
        household on residential energy costs that equals 6 percent or 
        more of the household income.
            (4) Peaker plant.--The term ``peaker plant'' means a fossil 
        fuel-fired power plant or unit of a power plant that is run 
        primarily to meet peak electricity demand, as determined by the 
        Secretary, in coordination with the Administrator of the 
        Environmental Protection Agency and the applicable local 
        electrical grid operator.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

SEC. 3. ANNUAL REPORT ON PEAKER PLANTS IN THE UNITED STATES.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, and annually thereafter, the Secretary, in 
coordination with the Administrator of the Environmental Protection 
Agency, the White House Environmental Justice Advisory Council, the 
White House Environmental Justice Interagency Council, the Council on 
Environmental Quality, and any other relevant Federal entity that the 
Secretary determines to be appropriate, shall submit to the appropriate 
committees of Congress a report that--
            (1) identifies each peaker plant in the United States; and
            (2) for each peaker plant identified under paragraph (1)--
                    (A) describes the location of the peaker plant and 
                related socioeconomic and demographic data for that 
                location, including whether the peaker plant is located 
                in or adjacent to a disadvantaged community;
                    (B) evaluates the quantity of carbon dioxide, 
                nitric oxides, sulfur oxides, fine particulate matter 
                (PM<INF>2.5</INF>), and methane emitted per unit of 
                electricity generated by the peaker plant;
                    (C) identifies--
                            (i) the total number of hours that the 
                        peaker plant generates electricity during the 
                        year covered by the report;
                            (ii) the capacity factor of the plant;
                            (iii) the average number of hours that the 
                        peaker plant generates electricity each time 
                        that the peaker plant generates electricity; 
                        and
                            (iv) the percentage of the total number of 
                        instances in which the peaker plant is started 
                        that result in the peaker plant generating 
                        electricity for--
                                    (I) not less than 4 hours;
                                    (II) not less than 8 hours; and
                                    (III) not less than 12 hours; and
                    (D) identifies, for each day on which the 3 air 
                monitors closest to the peaker plant indicate that 
                Federal ozone or particulate matter standards have been 
                exceeded, the percentage of peak demand met by the 
                peaker plant for the electrical grid load zone served 
                by the peaker plant.
    (b) Community Engagement.--In preparing a report under subsection 
(a), the Secretary shall initiate and carry out public engagement with 
residents and stakeholders from disadvantaged communities containing a 
peaker plant.

SEC. 4. CREDIT FOR GENERATION AND STORAGE OF ENERGY FROM RENEWABLE 
              SOURCES.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 48C the following new section:

``SEC. 48D. RENEWABLE ENERGY GENERATION AND STORAGE CREDIT.

    ``(a) In General.--For purposes of section 46, the renewable energy 
generation and storage credit for any taxable year is an amount equal 
to 10 percent of the qualified investment for such taxable year with 
respect to any qualified renewable energy facility.
    ``(b) Qualified Investment With Respect to Qualified Renewable 
Energy Facilities.--
            ``(1) In general.--For purposes of subsection (a), the 
        qualified investment with respect to a qualified renewable 
        energy facility for any taxable year is the basis of any 
        qualified property placed in service by the taxpayer during 
        such taxable year which is part of a qualified renewable energy 
        facility.
            ``(2) Qualified property.--For purposes of this subsection, 
        the term `qualified property' means property--
                    ``(A) which is--
                            ``(i) tangible personal property, or
                            ``(ii) other tangible property (not 
                        including a building or its structural 
                        components), but only if such property is used 
                        as an integral part of the qualified renewable 
                        energy facility,
                    ``(B) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable,
                    ``(C) which is constructed, reconstructed, erected, 
                installed, or acquired by the taxpayer, and
                    ``(D) the original use of which commences with the 
                taxpayer.
            ``(3) Qualified renewable energy facility.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `qualified renewable energy facility' means a 
                facility which--
                            ``(i) uses solar, wind, low-impact 
                        hydroelectric (as certified by the Low Impact 
                        Hydropower Institute), geothermal, tidal, or 
                        wave energy to generate electricity which will 
                        be received and stored by property described in 
                        clause (ii),
                            ``(ii) contains property which receives, 
                        stores, and delivers electricity described in 
                        clause (i), provided that such electricity is--
                                    ``(I)(aa) sold by the taxpayer to 
                                an unrelated person, or
                                    ``(bb) in the case of a facility 
                                which is equipped with a metering 
                                device which is owned and operated by 
                                an unrelated person, sold or consumed 
                                by the taxpayer, and
                                    ``(II) at a minimum, discharged at 
                                such times as a peaker plant within the 
                                same electrical grid load zone would 
                                operate to meet peak electricity demand 
                                (as determined by the grid operator for 
                                such electrical grid), and
                            ``(iii) which is placed in service--
                                    ``(I) in a disadvantaged community 
                                which is located within--
                                            ``(aa) the same census 
                                        tract as a peaker plant, or
                                            ``(bb) a census tract that 
                                        is adjacent to a census tract 
                                        in which a peaker plant is 
                                        located, and
                                    ``(II) after December 31, 2021.
                    ``(B) Special rule.--For purposes of this 
                paragraph, a facility shall not be deemed to be a 
                qualified renewable energy facility unless the taxpayer 
                demonstrates, to the satisfaction of the Secretary, 
                that--
                            ``(i) the property described in clause (i) 
                        of subparagraph (A) is co-located with property 
                        described in clause (ii) of such subparagraph,
                            ``(ii) such taxpayer has, with respect to 
                        the property described in clause (ii) of such 
                        subparagraph, entered into a contract which 
                        ensures that such property operates primarily 
                        to receive, store, and deliver electricity from 
                        any property described in clause (i) of such 
                        subparagraph, or
                            ``(iii) the property described in clause 
                        (ii) of such subparagraph receives electricity 
                        during periods of typically high production of 
                        electricity, as a percentage of the grid 
                        generation mix, from sources described in 
                        clause (i) of such subparagraph, as determined 
                        by the grid operator for the electrical grid.
    ``(c) Certain Progress Expenditure Rules Made Applicable.--Rules 
similar to the rules of subsections (c)(4) and (d) of section 46 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990) shall apply for purposes of subsection (a).
    ``(d) Definitions.--The terms `disadvantaged community' and `peaker 
plant' have the same meanings given such term under section 2 of the 
PEAKER Act of 2021.''.
    (b) Conforming Amendments.--
            (1) Section 46 of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by striking ``and'' at the end of paragraph 
                (5);
                    (B) by striking the period at the end of paragraph 
                (6) and inserting ``, and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(7) the renewable energy generation and storage 
        credit.''.
            (2) Section 49(a)(1)(C) of such Code is amended--
                    (A) by striking ``and'' at the end of clause (iv);
                    (B) by striking the period at the end of clause (v) 
                and inserting ``, and''; and
                    (C) by adding at the end the following new clause:
                            ``(vi) the basis of any qualified property 
                        which is part of a qualified renewable energy 
                        facility under section 48D.''.
            (3) Section 50(a)(2)(E) of such Code is amended by striking 
        ``or 48C(b)(2)'' and inserting ``48C(b)(2), or 48D(c)''.
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 48C the following new item:

``48D. Renewable energy generation and storage credit.''.
    (c) Effective Date.--The amendments made by this subsection shall 
apply to property placed in service after December 31, 2020, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).

SEC. 5. RENEWABLE ENERGY GRANT PROGRAM.

    (a) Definitions.--In this section:
            (1) Eligible entity.--The term ``eligible entity'' means 
        each of the following:
                    (A) A unit of State or local government.
                    (B) A tax-exempt nonprofit organization.
                    (C) A community-owned energy generation facility or 
                energy storage facility located in a disadvantaged 
                community.
                    (D) A community-based energy cooperative or a 
                similar group of individuals within a community who are 
                pursuing an eligible project described in subsection 
                (d).
                    (E) A partnership between--
                            (i) 1 or more of the entities described in 
                        subparagraphs (A) through (D); and
                            (ii)(I) an electric utility; or
                            (II) a private entity.
            (2) Energy storage facility.--The term ``energy storage 
        facility'' means a facility that receives, stores, and delivers 
        electricity.
            (3) Program.--The term ``program'' means the grant program 
        established under subsection (b).
            (4) Qualifying community energy proposal.--The term 
        ``qualifying community energy proposal'' means a proposal to 
        deploy and implement renewable energy generation, energy 
        storage technology, energy efficiency upgrades, energy demand 
        management strategies, or distributed renewable energy 
        resources that a qualifying community energy study determines 
        can reduce the runtime of an existing or planned peaker plant 
        or otherwise reduce or replace the need for an existing or 
        planned peaker plant.
            (5) Qualifying community energy study.--The term 
        ``qualifying community energy study'' means a study or 
        assessment that--
                    (A) seeks to identify clean energy strategies to 
                reduce the runtime of an existing or planned peaker 
                plant or otherwise reduce or replace the need for an 
                existing or planned peaker plant, including strategies 
                that involve--
                            (i) renewable energy generation;
                            (ii) energy storage technology;
                            (iii) energy efficiency upgrades;
                            (iv) energy demand management strategies; 
                        or
                            (v) distributed renewable energy 
                        deployment; and
                    (B) is led by or performed in partnership with the 
                communities directly impacted by pollution from a 
                peaker plant that is located within the same or an 
                adjacent census tract.
            (6) Qualifying energy storage facility.--The term 
        ``qualifying energy storage facility'' means an energy storage 
        facility that--
                    (A) is colocated with a qualifying renewable energy 
                facility and operates primarily to receive, store, and 
                deliver renewable energy generated by that qualifying 
                renewable energy facility;
                    (B) has entered into a contract with 1 or more 
                qualifying renewable energy facilities such that the 
                energy storage system operates primarily to receive, 
                store, and deliver renewable energy generated by those 
                qualifying renewable energy facilities; or
                    (C) receives electricity during periods of 
                typically high production of renewable energy (as a 
                percentage of the grid generation mix), as determined 
                by the operator of the applicable electrical grid.
            (7) Qualifying renewable energy facility.--The term 
        ``qualifying renewable energy facility'' means a facility 
        that--
                    (A) generates renewable energy; and
                    (B)(i) is colocated with a qualifying energy 
                storage facility; or
                    (ii) has entered into a contract described in 
                paragraph (6)(B) with 1 or more qualifying energy 
                storage facilities.
            (8) Renewable energy.--The term ``renewable energy'' means 
        electricity that is generated by or derived from, as 
        applicable--
                    (A) a low-impact hydroelectric facility certified 
                by the Low Impact Hydropower Institute;
                    (B) solar energy;
                    (C) wind energy;
                    (D) geothermal energy;
                    (E) tidal energy; or
                    (F) wave energy.
    (b) Establishment.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall establish a grant program to 
assist eligible entities in--
            (1) carrying out projects for the construction, 
        reconstruction, erection, installation, or acquisition of 
        qualifying renewable energy facilities and qualifying energy 
        storage facilities;
            (2) carrying out projects for the implementation of 
        qualifying community energy proposals; and
            (3) developing and carrying out qualifying community energy 
        studies.
    (c) Applications.--To be eligible to receive a grant under the 
program, an eligible entity shall submit to the Secretary an 
application at such time, in such manner, and containing such 
information as the Secretary may require.
    (d) Eligible Projects and Qualifying Community Energy Studies.--The 
Secretary may provide a grant under the program for--
            (1) a project described in subsection (b)(1) only if each 
        qualifying renewable energy facility and qualifying energy 
        storage facility to be constructed, reconstructed, erected, 
        installed, or acquired pursuant to the project will--
                    (A) be located in, or provide a direct and 
                significant benefit to, a disadvantaged community that 
                is located within--
                            (i) the same census tract as an existing or 
                        planned peaker plant; or
                            (ii) a census tract that is adjacent to a 
                        census tract in which an existing or planned 
                        peaker plant is or will be located; and
                    (B) at a minimum, discharge electricity at such 
                times as a peaker plant within the same electrical grid 
                load zone would operate to meet peak electricity 
                demand, as determined by the operator of the applicable 
                electrical grid;
            (2) a project described in subsection (b)(2) only if the 
        qualifying community energy proposal to be implemented pursuant 
        to the project will be implemented in, or provide a direct and 
        significant benefit to, a disadvantaged community that is 
        located within a census tract described in clause (i) or (ii) 
        of paragraph (1)(A); and
            (3) the development and carrying out of a qualifying 
        community energy study only if the qualifying community energy 
        study will provide for engagement with, and incorporate 
        feedback from, each disadvantaged community that is located 
        within a census tract described in clause (i) or (ii) of 
        paragraph (1)(A).
    (e) Technical Assistance Grants.--The Secretary may use amounts 
appropriated under subsection (i) to provide grants to eligible 
entities for the cost of acquiring technical assistance for the 
preparation and submission of an application under subsection (c).
    (f) Priority for Certain Eligible Entities.--In evaluating 
applications submitted by eligible entities described in subsection 
(a)(1)(B), the Secretary shall give priority to applications submitted 
by local, community-based organizations or energy cooperatives.
    (g) Cost Sharing.--
            (1) In general.--Except as provided in paragraph (2), with 
        respect to each project described in paragraph (1) or (2) of 
        subsection (b) for which a grant is provided under the program, 
        the maximum amount provided for the project under the program 
        shall not exceed 60 percent of the total cost incurred by the 
        applicable eligible entity for, as applicable--
                    (A) the construction, reconstruction, erection, 
                installation, or acquisition of the applicable 
                qualifying renewable energy facility or qualifying 
                energy storage facility; or
                    (B) the implementation of the applicable qualifying 
                community energy proposal.
            (2) Local, community-based organizations and energy 
        cooperatives.--With respect to a project described in paragraph 
        (1) that is carried out by, or for which an application is 
        submitted by, a local, community-based organization or an 
        energy cooperative, the maximum amount provided for the project 
        under the program shall not exceed 80 percent of the total cost 
        incurred by the local, community-based organization or energy 
        cooperative for the activities described in subparagraph (A) or 
        (B) of that paragraph, as applicable.
    (h) Community Engagement.--In carrying out this section, the 
Secretary shall initiate and carry out public engagement, particularly 
with residents and stakeholders from disadvantaged communities and 
communities in or adjacent to areas with existing peaker plants 
identified in a report under section 3(a), to ensure that--
            (1)(A) the public has input into the formulation of the 
        program; and
            (B) based on that input, the program best addresses the 
        needs and circumstances of disadvantaged communities; and
            (2) the public has information relating to the program, 
        including--
                    (A) the benefits of, and opportunities for, 
                eligible projects under the program; and
                    (B) the ways in which disadvantaged communities can 
                best use the program to address the clean energy goals 
                of those disadvantaged communities.
    (i) Authorization of Appropriations.--There is authorized to be 
appropriated to the Secretary to carry out the program not more than 
$1,000,000,000 for each of fiscal years 2022 through 2032.
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