Income Tax Credit: Electricity Produced From Certain Renewable Resources

Known as the Renewable Energy Production Tax Credit (“PTC”), this credit currently equals 2.3 cents per kilowatt hour (for 2015) produced at a qualifying facility and sold to an unrelated party from resources including: wind; closed-loop biomass; geothermal energy; and solar energy. For municipal solid waste, qualified hydropower, marine and hydrokinetic energy, small irrigation power, and open-loop biomass facilities, the credit is 1.2 cent per kilowatt hour. The credit is reduced for facilities receiving government grants, tax-free or otherwise subsidized financing, or claiming other tax credits. The credit is available for a 10-year period, beginning on the date the facility is placed in service. The PATH Act of 2015 extended the PTC to facilities other than wind for which construction begins before January 1, 2017. For wind facilities, the Consolidated Appropriations Act of 2016 extended the availability of the PTC through 2019, but it begins to phase out for facilities that start construction after 2016. For wind facilities that begin construction in 2017, the PTC is reduced 20%; if construction begins in 2018, the credit is reduced 40%; and if construction begins in 2019, the PTC is reduced 60%.