New rules give developers a longer window during which to complete projects in order to qualify for tax credits on projects.
On Tuesday, the Treasury Department and the Internal Revenue Service (IRS) issued guidance that extends safe harbor provisions for renewable energy projects in order to address impacts from the COVID pandemic.
The revisions, which are retroactive, do the following:
- Extends the placed-in-service safe harbor to six years for projects that began construction from 2016-2019;
- Extends the placed-in-service safe harbor to five years for projects that began construction in 2020; and
- Allows taxpayers to demonstrate safe harbor compliance by using the “continuous effort” standard, regardless of how construction of the facility began.
Gregory Wetstone, President and CEO of the American Council on Renewable Energy (ACORE) said it was the right move on the part of the IRS due to delays that many developers experienced as a result of the pandemic.
“The COVID pandemic disrupted supply chains, created significant permitting delays and jeopardized the timely completion of many renewable projects. Today’s IRS notice aimed at mitigating those COVID-related impacts is a welcome development and will go a long way toward ensuring these important clean energy projects get done,” he said in a statement.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA) acknowledged that many solar developers faced delays on projects and said the notice “will give them much-needed breathing room to complete these projects.”
“Businesses now have the certainty they need to keep these projects moving forward, and we thank our federal leaders at the Treasury Department for making this decision,” she added.
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Source: Renewable Energy