US Treasury to Tweak Tax Credit Deadlines for Renewables Projects
A concise three-sentence letter sent by the U.S. Treasury Department on Thursday suggests relief may be on the way for a renewables industry concerned about meeting quickly approaching tax credit deadlines.
The letter came in response to a late April appeal from a bipartisan group of senators who asked that the department extend deadlines for solar and wind developers looking to qualify projects for the federal Investment Tax Credit and Production Tax Credit. In the letter, addressed to Republican Sen. Charles Grassley of Iowa, a long-time champion of the U.S. wind industry, Treasury said that it “plans to modify the relevant rules in the near future.”
That statement, though short on detail, may give breathing room to developers scrambling to keep projects on track as COVID-19-fueled delays throw schedules into disarray.
Under existing safe-harbor provisions, solar developers must begin construction or invest a certain amount of cash by a specific date in order to qualify projects. Wind developers, meanwhile, had to finish construction by the end of 2020 to secure the full Production Tax Credit. The timelines of both credits put pressure on developers thrown a curveball as the pandemic began shutting down states across the U.S.
In their letter, the senators had asked that Treasury offer a "temporary extension of the continuity safe harbor of five years, in lieu of the current four."
In a Thursday response to Treasury's letter, the American Council on Renewable Energy said a tweak would be “immensely helpful” to the industry in coping with current conditions.
“We are encouraged by the Treasury Department’s letter announcing its intent to modify time-sensitive safe harbor deadlines for renewable energy tax incentives," Gregory Wetstone, the group’s president and CEO, said in a statement. “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."
The American Wind Energy Association, an industry group, also applauded the indication that Treasury would modify the deadlines.
The renewables industry has been lobbying for the change , which will give developers more time and flexibility in meeting the requirements of the tax credit. The coronavirus has upended some development timelines and led some renewables companies to issue “force majeure" claims.
The fix legislators suggested appears to yield the most benefit for the wind industry, by lengthening the amount of time projects that started construction in 2016 and 2017 have to reach completion.
Utilities investing in large-scale wind projects also stand to gain from the proposed change. On a Thursday first-quarter earnings call, Xcel Energy CEO Ben Fowke noted that COVID-19 related supply chain disruptions may push the completion date of two of the utility’s wind farm...