Solar Energy

Published on May 28th, 2020 | by greentechheadlines

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Extension granted! US Treasury extends safe harbor timeframe for renewable tax credits –

Extension granted! US Treasury extends safe harbor timeframe for renewable tax credits –

On Wednesday, May 27, the U.S.
treasury department issued Notice 2020-41 related to the safe harbor deadline
for renewable energy projects that began construction in 2016 or 2017. Under
the old rule those projects would have needed to become operational by the end
of 2020 in order to claim the full 30 percent Investment Tax Credit (ITC) for
solar projects or the full 2.5 cents per kWh Production Tax Credit (PTC) for
wind projects. Yesterday’s announcement gives them one more year, until the end
of 2021, to begin generating power.

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

The announcement was made in
recognition that the COVID-19 pandemic has caused major supply chain disruptions,
bottlenecks and work stoppages.

Gregory Wetstone, President and
CEO of the American Council on Renewable Energy (ACORE) praised the move in a
statement. “Treasury’s recently released guidance granting an additional year
to meet safe harbor qualifications for renewable tax credits is a welcome and
important step to help the renewable sector and its workers in the face of the
delays, disruptions and other challenges associated with COVID-19,” he said.

In addition, Wetstone called for
Congress to temporarily make the tax credits refundable and to take “other
commonsense measures so the renewable sector can be an economic driver for the
nation through this downturn, and an effective climate solution over the long
haul.”

According to a notice issued by
Keith Martin of law firm Norton Rose Fullbright, the extension will relieve “a
traffic jam that had been expected as wind developers rush to finish some
15,000 megawatts of projects facing an end-of-2020 deadline.”

In addition to wind and solar
project, the extension applies to geothermal, biomass, landfill gas, waste-to-energy,
incremental hydroelectric and hydrokinetic projects that started construction
in 2016 or 2017, the firm said.

The IRS notice also gave an
extension to solar and fuel cell project developers who paid for equipment at
the end of 2019 expecting to take delivery within 3.5 months but experienced
supply chain disruptions. Kevin Peason, a partner at law firm Stoel Rives
commented in a statement:

“The additional clarity
regarding the 3½ month rule also provides welcome certainty to solar developers
who paid for modules or other energy property near the end of 2019 but, due to
COVID-19 related delays, did not receive the property within the applicable 3½
month timeframe.  Although those
developers may have qualified without regard to the added clarity, it should
make financing transactions easier for impacted projects.”

Read the entire IRS notice
here
.


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