Advertisement

April 23, 2014

Renewable Energy Alert - IRS Releases 2013 Annual Inflation Factor and Reference Prices For Section 45 Production Tax Credits

2013 Tax Credit Amounts: The IRS recently released the inflation adjustment factor and reference prices for the 2013 calendar year, which are necessary for calculating the Section 45 production tax credits. Based on the 2013 inflation factor of 1.5063, there is an increase in the production tax credit amount for wind, geothermal and closed loop biomass from 2.2 cents/kwh to 2.3 cents/kwh. This is the first increase in three years. The 2013 tax credit amounts for renewable energy production, refined coal production, and Indian coal production are set forth below.

 

Renewable energy source or coal production activity 

2013 credit amount (cents per kilowatt-hour; dollars per ton

Deadline for beginning contruction or facility being placed in service

Wind 

2.3 

12/31/13 

Closed-loop biomass 

2.3 

12/31/13 

Open-loop biomass 

1.1 

12/31/13 

Geothermal energy 

2.3 

12/31/13 

Solar energy (pre-2006 facilities only) 

2.3 

12/31/05 

Small irrigation power 

1.1

10/02/08 

Municipal solid waste (includes landfill gas and trash combusion facilities) 

1.1 

12/31/13

Qualified hydropower 

1.1 

12/31/13 

Marine & Hyrdokinetic 

1.1 

12/31/13 

Refined Coal 

$6.590/ton 

12/31/11 

Indian coal production

$2.308/ton 

12/31/08 

2013 Reference Prices; No Tax Credit Phase-out: If the reference price for a particular energy source (as published by the IRS) exceeds a certain designated level, then the Section 45 production tax credit will be reduced or completely phased out. Based on the 2013 reference prices, there will be no phase-out for any of the renewable energy sources or coal production activities for the 2013 calendar year.

The 2013 reference price for wind is 4.53 cents/kilowatt hour. Since this reference price does not exceed 12.05 cents/kilowatt (i.e., 8 cents multiplied by the 1.5063 inflation factor for 2013), there will be no phase-out during 2013 of tax credits realized from the sale of electricity produced from wind energy. Similarly, the 2013 reference price for refined coal is $58.23/ton. Since this reference price does not exceed $81.68/ton (i.e., $31.90 multiplied by 1.5063 inflation factor and 1.7), there will be no phase-out during 2013 for tax credits realized from the sale of refined coal.

The IRS still has not determined reference prices for electricity produced from closed-loop biomass, open-loop biomass, geothermal, solar, small irrigation power, municipal solid waste, hydropower and marine & hydrokinetic energy. Accordingly, there will be no phase-out during 2013 for tax credits realized from these renewable sources.

© 2014 BARNES & THORNBURG LLP

About the Author

William Ewing, Energy Attorney, Barnes Thornburg, Law firm
Partner

William P. Ewing is a partner in the Atlanta office of Barnes & Thornburg LLP, where he is co-chair of the firm’s Renewable Energy Practice Group and a member of the Corporate Department.

404-264-4050

Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.

The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 If you would ike to contact us via email please click here.