- Congress Poised to Extend Tax Credits for Renewable Energy Projects
- January 8, 2016 | Author: Kenneth C. Foltz
- Law Firm: Leech Tishman - Pittsburgh Office
- WASHINGTON, D.C. - The path to reaching a compromise to break the stalemate on the Federal budget is being paved by extending current with tax credits extensions and lifting the ban on the exportation of crude oil exports. The House of Representatives is are on the verge of passing two bills, the omnibus spending bill (favored by Democrats) and the tax credit extenders bill (favored by Republicans). This bipartisan compromise avoids a government shutdown and gives new life to two significant tax credit programs used as a catalyst for wind and solar renewable energy projects.
If these bills are passed as proposed, the Production Tax Credit (PTC) and Investment Tax Credit (ITC) will be extended in accordance with these general terms:
Production Tax Credit - Wind
The deadline for projects to be eligible for 100% PTC credits would be extended to December 31, 2016 (subject to start of construction requirements). For projects that would commence in 2016, these projects can elect the 10-year credit - currently at 2.3 cents a kilowatt-hour of electricity generated or the onetime 30% investment credit. The credit eligibility would be reduced by 20% annually for projects that would start construction in 2017, 2018, 2019 and 2020. This extension should generate investment in new wind development projects.
Incentive Tax Credit - Solar
The deadline for solar projects to be eligible for the 30% investment credit would be extended to December 31, 2019. The eligibility for the credit will scale back 4% annually until 2023. Projects must be placed into service by December 31, 2023 or the projects will only be eligible for 10% credit.
Jim Spencer is President and CEO of EverPower, a developer, owner and operator of utility grade wind projects. He provided his take on the deal to Leech Tishman: “Congress recognizes that wind power is an important element of our current and future energy infrastructure. A multiyear extension of the PTC and ITC credits will spur private investment in projects. The PTC 100% extension for 2016 should drive developers to commence projects in the next 12 months, so this is not a bad result for the industry.”