Tax Equity Times, 12-22-2020
- The United States Congress passed a second large stimulus bill aimed at curtailing the economic disruptions caused by COVID-19.
- The Relief Bill extends renewable energy tax credits for wind projects, solar projects and carbon capture and sequestration and contains specific provisions addressing offshore wind farms.
- These extensions include a one-year extension for wind projects, a two-year extension for solar projects and a two-year extension for carbon capture and sequestration projects.
- The Relief Bill extends the 26% ITC available for solar projects that begin construction prior to January 1, 2021 by two years, allowing the 26% ITC for projects that begin construction before January 1, 2023. A 22% credit would then be available for projects that begin construction before January 1, 2024, with the credit phased out afterwards.
- In the case of wind facilities, a taxpayer may elect to treat these facilities as “energy property” and thereby claim the ITC in lieu of the PTC, subject to a phase-down similar to the PTC phase-down. The Extenders Bill allowed taxpayers to elect to receive the ITC with a 40% reduction (i.e., to 18%) for wind facilities the construction of which begins before January 1, 2021. The Relief Bill extends eligibility at the 18% level for one year for projects that begin construction before January 1, 2022.
- The bill allows greater tax credit flexibility for “qualified offshore wind facilities.” These provisions allow offshore wind farms to elect either the PTC or the ITC, with the ITC extended by five years, allowing a full 30% investment tax credit for offshore wind farms that begin construction before January 1, 2026.
- The residential energy efficient property credit of 30% of property placed in service (solar, wind, fuel cells, geothermal heat pumps) extends some of the deadlines, allowing a 26% credit for property placed in service before January 1, 2023, and a 22% credit for property placed in service before January 1, 2024.