In this list
Electric Power | Energy Transition

Congress passes ITC and PTC 'extender bill' for renewables, but confusion injected by Trump

Commodities | Energy | Electric Power | Renewables | Natural Gas

Hydrogen: Beyond the Hype

Energy | Electric Power

Platts Forward Curves – Gas and Power

Energy Transition | Shipping | Gasoline | Oil | Natural Gas | Biofuels | Commodities

Rio Energy Virtual Forum

Metals | Steel

US weekly steel production up 38% from a year ago

Energy | Electric Power | Energy Transition | Emissions | Renewables | LNG | Natural Gas

Propane lights up the Tokyo Games, as hydrogen makes its Olympic debut

Congress passes ITC and PTC 'extender bill' for renewables, but confusion injected by Trump

Highlights

Solar deadlines to be extended two years

Wind developers to get extension to end of 2021

Trump so far balks at signing the legislation

Houston — A last-minute tax extender bill that that was part of an omnibus funding bill passed by Congress Dec. 21 extended deadlines for developers of solar, wind and other renewable energy projects to start construction of new projects to qualify for federal tax credits.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

However, President Donald Trump created uncertainty about the fate of the bill late on Dec. 22 when he said he objected to some items in the omnibus bill, prompting one senior renewable industry observer to say that construction of projects could be delayed if the bill dies with the end of the current congress.

The $1.4 trillion omnibus bill was tied together with the $900 billion COVID-19 relief bill. The omnibus bill included legislation containing numerous energy bills. The Department of Energy, for example, was authorized to spend $35 billion in federal research and development. The tax credit extensions in the omnibus bill are seen as prolonging the growth of both solar and wind installations.

Under the terms of the bill, solar deadlines have been extended by two years. Projects on which construction starts in 2020, 2021 or 2022 will qualify for a 26% investment tax credit. The tax credit drops to 22% for projects starting construction in 2023.

Solar projects must be placed in service by the end of 2025. A project slipping past 2025 qualifies for only a 10% investment tax credit.

An investment tax credit for a solar facility is a percentage of the cost of a project and is claimed in the year the project is placed into service. A 30% investment tax credit on a $600 million solar project is worth $180 million.

Onshore wind projects have been given another year to start construction to qualify for tax credits.

They had faced a deadline of the end of this year. The new deadline is the end of 2021.

Wind projects starting construction in either 2020 or 2021 will qualify for production tax credits at 60% of the full rate on the electricity output for 10 years, or an 18% investment tax credit on the project cost in the year the project is put in service. Production tax credits at 60% of the full rate are currently $15 a MWh.

Trump to decide

With the passage of the bill that extended the deadlines to start construction, "many renewable energy developers began scrambling to reevaluate arrangements they put in place this year to start construction of projects to qualify for federal tax credits," said Keith Martin, an attorney with the Norton Rose Fulbright law firm in Washington, DC. "Projects must normally be completed within four years after construction starts. A later construction start will buy more time."

While Trump did not explicitly threaten to veto the omnibus and COVID-19 relief bill, a video released on Twitter nonetheless left confusion.

According to Martin, Trump must make a decision on what to do with the $1.4 trillion omnibus bill by Dec. 28, when the government will run out of funding. "He could stretch it out longer if he is willing to see the government shut down,"

The Senate is in recess until Jan. 2, the last day of the current Congress, with the new Congress to be sworn in on Jan. 3.

Under the rules of a "pocket veto," the US Constitution grants the president 10 days to review a measure passed by Congress. If the president has not signed the bill after 10 days, it becomes law without his signature, unless Congress adjourns during the 10-day period, in which case the bill does not become law.

It is not clear, in any case, if Congress would override a veto if given the chance, Martin said. "Trump has vetoed eight bills. None of the vetoes have been overridden. Republicans have not shown a willingness, to date, to break ranks with Trump."

Martin said that many renewable developers "have been thinking the last two days about whether to delay the start of construction of projects from 2020 to 2021. Projects must be completed within four years after construction starts."

Trump's tweet have injected risk that developers could be left with nothing if there are delays, Martin said Dec. 23 in an email.

"If the tax extenders are not enacted this year and do not make it into any stimulus bill next year, then wind developers will have missed the deadline to start construction of projects to qualify for any federal tax credits."

Solar developers, Martin noted, "will have missed the deadline to qualify for a 26% investment tax credit, but can still qualify for a 22% tax credit by starting construction next year."