Renewable Energy: The IRS Has Your Back

In an unexpected move, the Internal Revenue Service (IRS) has made it a bit easier for renewable energy projects (mostly wind) to get the production tax credit (PTC), which expired in 2013.

By giving some more room for the industry to meet the requirements, more projects will qualify – extending the beneficial impact of the credits beyond 2013.

It should free-up many more wind projects to move forward that have been put on hold.

If you remember, the critical change made in the one-year extension of the PTC was that projects need to be started – but not finished – by the end of 2013.

Since then, the IRS clarified what "beginning a project" means. This new clarification makes it even clearer and eases the rules a bit.

For example, IRS lowered the threshold from 5% down to 3% for how much of a project’s total costs had to be paid by the end of 2013.

The IRS is also more concerned about the "nature of the work performed, not the amount or cost," when it comes to the requirement of "significant" activity" prior to the deadline. They are looking for confirmation that work begun is integral to the project, such as excavation for wind turbine foundations.

The PTC applies to wind, geothermal and biomass projects.
Because of this short-term renewal, about 15 gigawatts of wind will be added through 2016, according to the US Energy Information
Administration (EIA) projects.

If it isn’t renewed again, EIA expects growth will slow significantly again after 2016 – when current projects are finished – and not pick up again until after 2030 because of  relatively little demand for new capacity. Wow.

Efforts are underway in Congress to get the PTC renewed, but most Republicans are against it. Some developers have put projects on hold until there’s a decision. "Our view is that with the uncertainty in the market as a result of the expired PTC, there are not great conditions for investing and building new projects in the U.S. right now," Paul Copleman of Iberdrola Renewables told  Casper Star-Tribune.

World’s Largest Wind Farm Close to Approval

In related news, Wyoming approved the 3 gigawatt Chokecherry/ Sierra Madre wind project, where 1000 turbines will be spread across 220,000 acres of land. Remaining permits are expected next year. 

Wind Farm Chokecherry Wyoming

Sited in one of windiest places in the US, the $5 billion project will supply electricity to 1 million homes – creating 1000 jobs during construction. It is one of the projects President Obama expedited as part of his "We Can’t Wait" (for Congress) initiative.

While it’s wonderful that so many more homes will be powered by wind, such an enormous project can’t help but put more strain on wildlands and wildlife.

"We have collected more scientific data in a broader area and to a finer degree than anyone else has ever done," says Bill Miller, CEO of Power Company of Wyoming (the developer). "We know where turbines should and should not go. Our plan to microsite all turbines will assure potential impacts on wildlife are far lower than outlined in the general project-wide EIS, while also materially increasing the country’s clean energy supplies."  

Half of the project will be on a private cattle ranch and half on public land.

Miller says the project is viable without the wind production tax credit, but with it, electricity from the project would be cheaper  for utilities and their customers. "Because of the size and the quality of the resource we have for the project, this project can be done without the production tax credit," even though it would be  beneficial to the project and the market, he told Casper Star-Tribune.  There are probably not a lot of projects today that could say it doesn’t matter. It does matter, but it is not absolutely required." 

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