Renewable Energy Tax Extenders – In Doubt?

23 December 2020 Renewable Energy Outlook Blog
Authors: David B. Weisblat Tori Roessler

Congress has extended and expanded renewable energy tax benefits as part of the comprehensive COVID relief bill passed on December 21, 2020 and now awaiting President Trump’s signature.  The relief bill passed by large bipartisan margins (92-6 in the Senate and 359-53 in the House).   However, President Trump has strongly expressed his displeasure that the $600 direct payments to taxpayers are too low and has asked Congress to increase these payments and make other changes to the legislation and has suggested that he may not sign it unless changes are made. 

Extender Recap:

PTC extension – 

60% PTC extended for wind and other qualified facilities that start construction before January 1, 2021 (a one year extension of current law)

ITC election for qualified facilities -

Taxpayer may elect to claim ITC for qualified facilities otherwise eligible for PTC provided start of construction before January 1, 2022 (a one year extension of current law)

ITC extension for energy property – 

Extension for otherwise eligible property provided start of construction before January 1, 2024 (a two year extension of current law)

Changes to ITC phaseouts for solar (a two year extension of current law); the below table illustrates applicable percentages:

 

Construction starts:  and is Placed in Service Before  ITC percentage 
 Before 2020  1/1/26  30%
 During 2020-2022  1/1/26  26%
 During 2023  1/1/26  22%
 Before 2024  N/A  10%

(similar phaseouts for fiber-optic solar, qualified fuel cells, and qualified small wind energy property, but 0% ITC after 2023)

New 26% ITC for “waste energy recovery property” -

Construction must start before January 1, 2024 – subject to ITC phaseout 

New 30% ITC for qualified offshore wind facilities -

Construction must start before January 1, 2026; no phaseout

What’s Next?

President Trump is seeking to increase the direct relief payments to taxpayers from $600 to $2,000.  He is also asking to “get rid of the wasteful and unnecessary items from this legislation,” many of which his own administration negotiated.

If Trump vetoes the bill, legislators may override his veto.  However, if he simply chooses not to sign it, the bill may need to be reintroduced next year.  This is further complicated by the fact that the relief bill was consolidated with another “must pass” large spending bill to fund the U.S. Government through next September.  As such, if not enacted into law, the Government will have to shut down starting Monday, December 28.

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