May 01, 2016

Fading into the sunset: Solar and wind energy get five more years of tax credits with a phase-down

Felix Mormann

In the closing weeks of 2015, the solar and wind energy industries scored a major policy victory as Congress voted to extend the tax credits that have been a key driver of recent renewable energy deployment in the United States. Legislators reached a rare bipartisan compromise when renewable energy advocates agreed to lift the 40-year old export embargo on U.S. oil in exchange for an extra five years of tax credit support for solar and wind energy. Renewable energy practitioners can now help their clients take advantage of these incentives for several more years and would be wise to do so sooner rather than later because the Consolidated Appropriations Act of 2016 does more than just extend the production tax credit (PTC) for wind and the investment tax credit (ITC) for solar; it modifies both tax credits in two critical ways. First, the act provides for a gradual phase-down of the values of both credits. Second, it extends the “begin construction” language that determines a wind project’s tax credit eligibility to commercial solar projects. While providing much needed policy certainty, Congress also plays favorites and misses an opportunity for reform to enhance the overall efficiency of tax credit support for solar and wind energy.

Premium Content For:
  • Environment, Energy, and Resources Section
Join - Now