The Trump administration fulfilled its pledge to help the wind and solar industries weather the coronavirus pandemic, extending by one year certain deadlines for the federal tax credits developers rely on for financing projects.
In a notice quietly posted on Wednesday, the Internal Revenue Service extended the so-called “safe harbor” provisions under the wind and solar tax credits to account for delays companies have faced because of the virus outbreak.
The clean energy sector has been asking Congress for months to support these tweaks, but some Republican lawmakers objected to including any renewable energy provisions in previous coronavirus relief packages. A handful of Republican senators, though, including Senate Energy Committee Chairwoman Lisa Murkowski of Alaska and Senate Finance Committee Chairman Chuck Grassley of Iowa, urged the Treasury Department to make the adjustments.
The Treasury Department committed to doing so in a May 7 letter to Grassley.
Renewable energy backers praised the IRS notice as a welcome step.
The extension “provides the flexibility the industry needs to prevent the immediate harms from COVID-19 disruptions, without costing the Federal government any additional money,” said Tom Kiernan, CEO of the American Wind Energy Association, in a statement.
Under the safe harbor provisions, developers can qualify for the federal tax incentives if they demonstrate there is continuous construction on their project over a certain period of time.
The IRS is tweaking the provisions in two ways to adjust for coronavirus-related delays. First, for projects that began construction in 2016 and 2017, it allows an extra year under the safe harbor for developers to complete construction and bring their projects into service.
The tax agency is also adjusting how projects can show continuous construction to account for supply chain delays renewable energy companies have faced amid the pandemic. According to the notice, developers can continue to qualify for the incentives if there was a “reasonable expectation at the time they made the payment” that they’d receive the ordered services or equipment within three and a half months.
That adjustment applies for services or equipment paid for between Sept. 16, 2019, and Oct. 15, 2020, the IRS said.
The latter tweak is particularly important for solar projects, many of which wouldn’t qualify for the one-year extension because many projects begun in 2016 and 2017 have already been completed.
“We appreciate the additional layer of clarity the Treasury Department has provided with respect to solar projects started in 2019,” said Erin Duncan, vice president of congressional affairs for the Solar Energy Industries Association, in a statement. “Today’s action shows that solar energy is an economic driver with bipartisan appeal.”
