The long-awaited action last Friday by the Treasury Department to finalize important “commence construction” guidance will continue market momentum and drive additional investment and deployment in solar and other renewable energy resources by providing certainty to investors and developers. In a nutshell, projects using solar energy and Section 48 technologies will have options that resemble those available to wind projects under Section 45, including a four-year safe harbor period during which there will be no requirement to demonstrate continuous construction for projects that are placed in service within four years, or by January 2024.
This Investment Tax Credit (ITC) implementation guidance reflects important and enduring bipartisan Congressional and Administration support for the growing role of solar and renewable energy in our nation’s power infrastructure. To take advantage of the 30 percent, 26 percent or 22 percent ITC, a project must be placed in service before January 1, 2024. For more background on the ITC guidance, we published a new issue brief, available for download here.
Many in Congress and the Administration support these tax policy measures to help ensure a level playing field for most renewable energy generation as part of the nation’s efforts to modernize the grid and ensure reliable and affordable power generation. However, tax incentives for biomass, hydropower and geothermal generation were only retroactively extended earlier this year through the end of 2017, last year! Meanwhile, fossil and other generation resources enjoy permanent and long-standing tax policy support, some for more than 100 years. The contrast is inescapable and troubling.
We are pleased to celebrate the notable progress marked in this new guidance and look forward to continuing to work with Congress and the Administration on a policy agenda that encourages fair competition and private sector investment in energy infrastructure to deliver reliable, cheaper and emissions-free power to our nation’s consumers and businesses.