On Tuesday, the U.S. Treasury Department and the Internal Revenue Service (IRS) issued guidance that extends safe harbor provisions for renewable energy projects in order to address impacts from the COVID-19 pandemic.
The U.S. government allows production tax credits of up to $25/MWh to be claimed on the first 10 years of electricity output from wind, geothermal and closed-loop biomass projects and up to $13/MWh on electricity from other biomass, landfill gas, incremental hydroelectric and marine and hydrokinetic projects.
The revisions, which are retroactive, do the following:
Extend the placed-in-service safe harbor to six years for projects that began construction from 2016-2019;
Extend the placed-in-service safe harbor to five years for projects that began construction in 2020; and
Allow taxpayers to demonstrate safe harbor compliance by using the “continuous effort” standard, regardless of how construction of the facility began.
Read the complete IRS notice here.
Gregory Wetstone, president and chief executive officer of the American Council on Renewable Energy (ACORE), said it was the right move on the part of the IRS due to delays that many developers experienced as a result of the pandemic.
“The COVID pandemic disrupted supply chains, created significant permitting delays and jeopardized the timely completion of many renewable projects. Today’s IRS notice aimed at mitigating those COVID-related impacts is a welcome development and will go a long way toward ensuring these important clean energy projects get done,” he said in a statement.
