US Treasury says it may modify tax credit rules for wind and solar energy

Quadrupling Turbines

Last week the senate.gov website published a letter indicating that the Treasury Department “plans to modify the relevant rules in the near future” for solar and wind energy tax credits. The letter was sent in response to a request made by U.S. Senator from Iowa Charles “Chuck” Grassley for an extension of the safe harbor deadline for wind and solar energy to receive tax credits.

Under the current rules, wind energy projects that had “begun construction” in 2016 had until the end of 2020 to start operation in order to take advantage of the full 2.5 cents per kWh production tax credit (PTC). The rules for beginning construction said that a developer had to invest at least 5% into the project and show continuous construction activities and that the project must be placed in service within four years. If they did that, the project was considered in safe harbor.

Similar rules exist for solar project developers that wish to take the full investment tax credit (ITC) of 30% of the project cost.

Read more: Understanding ‘safe harbor’ for extending your 30 percent solar ITC qualification

With the Covid-19 pandemic, project developers have experienced supply chain disruptions as well as interruptions in construction due to stay-at-home orders, which have put their ability to collect the PTC and ITC in jeopardy.

Gregory Wetstone, President and CEO of the American Council on Renewable Energy (ACORE), said that he is encouraged by the letter.

 “Extending these safe harbor deadlines would be immensely helpful as the renewable sector has been hit hard these last couple of months by supply chain disruptions, shelter-in-place orders and other significant pandemic-related delays,” he said in a statement.

“We look forward to further detail on this critical issue and extend our appreciation to the Treasury Department for this important step, which will help the renewable sector continue as a key economic driver through this downturn, and an effective climate solution over the long haul,” he added.

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Jennifer Runyon has been studying and reporting about the world's transition to clean energy since 2007. As editor of the world's largest renewable energy publication, Renewable Energy World, she observed, interviewed experts about, and reported on major clean energy milestones including Germany's explosive growth of solar PV, the formation and development of the U.S. onshore wind industry, the U.K. offshore wind boom, China's solar manufacturing dominance, the rise of energy storage, the changing landscape for utilities and grid operators and much, much, more. Today, in addition to managing content on Renewable Energy World and POWERGRID International, she also serves as the conference advisory committee chair for DISTRIBUTECH, a globally recognized conference for the transmission and distribution industry. You can reach her at Jennifer.Runyon@ClarionEvents.com

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