Late on December 21, 2020, the Senate debated and approved a COVID-19 relief package and omnibus spending bill for 2021 that included, deep in its 5,500-plus pages, tax extenders for a selection of renewables tax credits, including a one-year extension for the wind production tax credit ("ITC") and a two-year extension for the solar investment tax credit ("ITC"), as well as a five-year extension for offshore wind projects taking the ITC. The bill, which was earlier approved by the House, is expected to be signed by President Trump later this week.
- The beginning of construction ("BOC") deadline was moved to 1/1/2022 (changed from 1/1/2021) for wind, closed-loop biomass, open-loop biomass, geothermal, landfill gas, trash, qualified hydropower and marine and hydrokinetic renewable energy facilities.
- The election to take ITC instead of PTC is available for projects with BOC before 1/1/2022 (changed from 1/1/2021).
- The 60% PTC in section 45(b)(5)(D) is extended to facilities with BOC before 1/1/2022 (changed from 1/1/2021); the same extension applies for wind facilities taking ITC under section 48(a)(5)(E)(iv).
- The 22%-26% solar ITC BOC deadline was extended two years to 1/1/2024 (changed from 1/1/2022). The same change applies for fiber-optic solar, ground thermal, qualified fuel cell, qualified microturbine property, combined heat and power system, and qualified small wind property.
- The 26% solar ITC is now available for projects with BOC in 2021-2022; the 22% solar ITC is available for projects with BOC in 2023. The solar ITC drops to 10% if BOC is before 1/1/2024 but placed in service ("PIS") is 1/1/2026 or later. The same change applies for fiber-optic solar, qualified fuel cell and qualified small wind property, except that the ITC phases down to 0% if PIS is 1/1/2026 or later.
- Qualified offshore wind facilities, if taking ITC, now have a BOC deadline of 1/1/2026. The general phaseout for wind projects taking ITC no longer applies.
- A qualified offshore wind facility must be "located in the inland navigable waters of the United States or in the coastal waters of the United States."
New ITC for "Waste Energy Recovery Property"
- The legislation introduces a new ITC for waste energy recovery property, defined as property that generates electricity solely from heat from buildings or equipment if the primary purpose of the building/equipment is not the generation of electricity. The property must have capacity of 50MW or less and there is an overlap rule for combined heat and power system property. For property to qualify, BOC must occur before 1/1/2024; the same phase-out rules apply as for fiber-optic solar, qualified fuel cell, and qualified small wind property.