US extends safe harbour provisions for COVID-hit renewable energy projects
The Trent Mesa wind farm in Texas. Photo: Business Wire.
June 30 (Renewables Now) - The US Internal Revenue Service (IRS) has once again granted extra time to renewable energy projects hit by the COVID-19 pandemic so they can meet safe harbour requirements and qualify for federal tax credits.
The guidance released on Tuesday aims to mitigate the impacts of the global health and economic crisis, which caused huge supply chain delays and thus hampered project development. An earlier extension enabling project developers to qualify for the investment tax credit (ITC) and the renewable electricity production tax credit (PTC) was granted in May last year.
The new provisions were made due to the continuous effect of the pandemic and delays that are still occurring and impacting project development. Those extraordinary circumstances have been obstructing developers in completing their projects in time to qualify for state support, the IRS said.
According to the new guidance, the placed-in-service safe harbour will be valid for six years for projects that entered construction between 2016 and 2019. Schemes whose construction was initiated in 2020 will have five years to get commissioned so as to be eligible for state support through the “continuity safe harbour” measure.
Furthermore, taxpayers will be able to demonstrate safe harbour compliance by using the "continuous effort" standard, regardless of how construction of the facility has been initiated. Such efforts could be incurring costs on top of the project budget, entering binding contracts for components or future construction activities, securing permits or performing physical work “of a significant nature.”
The measures were applauded by the American Council on Renewable Energy (ACORE). Its president and CEO Gregory Wetstone hailed IRS’ notice as “a welcome development” that will ensure jeopardised projects get completed.
Veselina Petrova is one of Renewables Now's most experienced green energy writers. For several years she has been keeping track of game-changing events both large and small projects and across the globe.