December 7, 2021

Volume XI, Number 341

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December 06, 2021

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COVID-19: New Stimulus Package Includes Sweeping Energy Reforms

Congress voted Monday evening to approve a $900 billion COVID-19 relief package. The package includes clean energy reforms designed to boost research and development, and extends and enhances renewable energy tax credits.

The legislation extends the Investment Tax Credit (ITC) for solar projects by two years, the Production Tax Credit (PTC) for wind projects and certain other technologies by one year, and creates a new 30% ITC for offshore wind projects that start construction through 2025.  

Notably, the legislation delays planned phase-downs of existing wind and solar tax credits. The bill also creates a new class of technology eligible for the ITC: waste-to-energy projects, which are generally defined as properties that generate electricity solely from heat from buildings or equipment, if the primary purpose of that building or equipment is not the generation of electricity.

The chart below summarizes the changes to the ITC and PTC made by the bill.

Technology

Start of Construction

Credit Available

Solar

2021 or 2022

26% ITC

Solar

2023

22% ITC

Onshore wind

2021

60% of PTC or 18% ITC

Offshore wind

2020-2025

30% ITC

Qualifying Closed-loop Biomass, Open-loop Biomass, Geothermal, Landfill Gas, MSW, Qualified Hydropower, and Marine and Hydrokinetic

2021

Full PTC or 30% ITC

Waste-to-Energy

2021 or 2022

30% ITC

Among other changes, the bill allows the 30% residential energy credit, known as the residential energy efficient property (REEP) credit, to apply to biomass expenditures, essentially biomass boilers and similar systems.  The bill also extends the start of construction date for eligibility for carbon capture/sequestration projects to qualify for tax credits from 2023 to 2025.

The bill authorizes approximately $35 billion for clean energy research and development programs focused on solar technology, advanced nuclear technology, geothermal, wind, energy storage, grid modernization, and carbon capture technology, including a large-scale carbon sequestration demonstration program.

The legislation phases-down the production and use of hydrofluorocarbons (HFCs), a class of greenhouse gases used in for cooling and refrigeration, by 85% over the next 15 years. According to a joint statement by House Speaker Nancy Pelosi (D-CA) and Senate Democratic Leader Chuck Schumer (D-NY) issued on December 20, 2020, the phase-out of HFCs will avoid up to 0.5 degree Celsius of global warming.

©2021 Pierce Atwood LLP. All rights reserved.National Law Review, Volume X, Number 357
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About this Author

Kris J. Eimicke, tax lawyer, Pierce Atwood
Partner

Kris Eimicke concentrates his practice on tax issues and economic development programs, with a special emphasis on state and federal new markets tax credit (NMTC) programs, renewable energy tax credits, historic rehabilitation tax credits, and the newly created opportunity zone program. Kris also regularly advises businesses, tax-exempt organizations, and individuals on tax issues related to a variety of business transactions, as well as representation before the Internal Revenue Service, state revenue agencies, and the courts on tax matters. 

(207) 791-1248
Sarah Tracy Energy Generation Attorney Pierce Atwood LLP
Partner

Sarah advises energy generation facilities and industrial and large commercial energy users with respect to energy and regulatory issues and due diligence matters.  Sarah also represents electric, natural gas, and telecommunications utilities before state regulatory entities. 

Sarah assists energy project owners and developers with due diligence in connection with energy infrastructure acquisitions and negotiates key energy agreements, including power purchase agreements, natural gas supply agreements and firm gas transportation agreements, and renewable energy credit purchase and...

207-791-1299
Kayla Grant  energy regulatory attorney Portland ME
Associate

Kayla Grant is an experienced energy regulatory attorney with a strong interest in energy policy and regulation. Kayla capitalizes on her prior experience as an attorney advisor to Federal Energy Regulatory Commission (FERC) administrative law judges to advocate for clients in utility ratemaking and electric transmission matters. This includes advising clients on issues related to FERC jurisdiction, cost-of-service and formula transmission rates, electric utility tariffs, and RTO/ISO markets. Kayla also assists clients with North American Electric Reliability Corporation (NERC) Reliability...

207-791-1228
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