U.S. Treasury Signals Extension of Tax Credit for Renewable Projects

By May 12, 2020 May 15th, 2020 News

On May 7, the U.S. Treasury signaled it is very likely to extend the safe harbor provisions for the federal tax incentives for both new wind and solar projects. In response to a bipartisan request made on April 23, the Treasury Department said it “plans to modify the relevant rules in the near future.”

The COVID-19 pandemic has created unforeseen issues for developers of renewable projects nationwide. Shelter-in-place orders and supply chain disruptions are creating uncertainty as to whether many wind and solar projects will qualify for the tax incentives which require certain project milestones to be achieved by the end of 2020.

The bipartisan request specifically seeks an extension of the “safe harbor” from four to five years for projects that began construction in 2016 & 2017. An extension of the December 31, 2020 deadline would allow developers more time to navigate the unforeseen challenges associated with COVID-19.  For corporate and institutional buyers of renewable energy, an extension would help increase or at least maintain the supply of new renewable projects in the development pipeline.

The bipartisan request was made by Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Ranking Member Ron Wyden (D-Ore.), Sens. John Thune (R-S.D.), Maria Cantwell (D-Wash.), and Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska) and Ranking Member Joe Manchin (D-W.Va.).