Wind and Solar Tax Credits Extended
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Congress agreed on legislation that would extend the investment tax credit (ITC) for solar projects for two years and the production tax credit (PTC) for wind projects for one year. The full legislative package combines a $900 billion COVID-19 relief package and an omnibus spending bill for 2021 with tax extenders and energy policy changes.
The solar ITC would continue to apply at 26% of eligible basis for any project that begins construction by the end of 2022. It would step down to 22% in 2023, and down to 10% in 2024 for commercial projects with the residential credit ending that year. Companies beginning construction on solar projects in 2021 would still have a four-year period to place their projects in service to take advantage of the ITC, with the statutory deadline for projects placed in service reset to before Jan. 1, 2026.
The wind PTC would continue to apply at 60% of the otherwise allowable amount for any project that begins construction by the end of 2021. The legislation also includes a new 30% offshore wind ITC for projects that commence construction by Dec. 31, 2025.
This is a very welcome extension to the renewable energy industry," Kevin Pearson, partner with Stoel Rives LLP, told POWER.
We are heartened to see Congress step up to provide Americans with some relief after our country has been mired in a public health and economic disaster," Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), said in a statement released on Dec. 21. Over the next few years, we have an opportunity to build a stronger, more reliable, and more equitable American energy economy, and the action Congress is taking today is a helpful down payment."
As we enter the new year, stable policy support will help ensure that wind and solar can continue providing the backbone of our country's electricity growth," Heather Zichal, CEO of the American Clean Power Association, said in a statement. We also applaud Congress for recognizing the enormous potential of offshore wind, America's largest untapped electricity source, as a brand-new provider of jobs for American workers and clean power for American families."
In addition to extending the tax credits, SEIA noted that additional funding was included in the bill for research and development, including on soft costs critical to distributed energy deployment and support for more sensible access to federal lands for renewable energy projects."
Hopper added, SEIA will continue to advocate for policy that incentivizes renewable energy deployment and addresses the climate crisis in a way that ensures environmental justice. We will work to make ITC benefits available as a direct payment to augment solar energy growth. We also must create sound infrastructure policy and ensure adequate funding to support programs such as SolarAPP [Solar Automated Permit Processing], which expedites solar project permitting."
-Aaron Larson is POWER's executive editor (@AaronL_Power, @POWERmagazine).
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