Category: Tax

1
Tax Credits for Storage After Solar or Wind?
2
Tax Credits for Energy Facilities Extended in New Budget Bill
3
ACORE and Bloomberg New Energy Finance – State of the Industry Webinar: Financing Renewables Post-Tax Reform
4
Tax Reform Goes to the President: How Did Renewables Fare?
5
Tax Reform Conference Bill Released: PTC and ITC Emerge Battered
6
FERC FINDS CERTAIN PASSIVE INVESTMENTS DO NOT REQUIRE PRIOR APPROVAL FOR TRANSFER
7
Senate Finance Committee Releases New technology-neutral Energy Credits Legislation
8
New Treasury Guidance Significantly Expands Field of Renewable Energy Projects That May Qualify for the PTC or ITC
9
Treasury Department Issues New Guidance on PTC and ITC
10
Winds of Change for Alternative Energy Tax Incentives in 2016

Tax Credits for Storage After Solar or Wind?

By Elizabeth Crouse, Elias Hinckley and William Holmes

On Friday, March 2, the Internal Revenue Service released Private Letter Ruling (“PLR”) 201809003. The PLR is not binding precedent, but it indicates that the IRS will permit a taxpayer to claim a Code Section 25D credit in respect of a residential battery installed after the solar panels to which it will be attached was installed. In the PLR, the IRS expressly states that it will treat the battery as property that “uses solar energy to generate electricity,” provided only solar energy is used to charge it.

The PLR concerns individuals claiming a credit for a residential system, but don’t stop reading. This outcome matters for C&I and utility scale projects also.

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Tax Credits for Energy Facilities Extended in New Budget Bill

By Charles Purcell,  Won-Han Cheng, Elizabeth Crouse, and Andrea Templeton

Congress recently enacted the Bipartisan Budget Act of 2018, which contained a number of extenders applicable to tax credits for energy facilities.  In the case of PTC-eligible energy facilities that were not covered by the earlier extension applicable to wind and solar, the credit was extended to facilities where construction was commenced before January 1, 2018.  This new rule applies to closed and open loop biomass, geothermal, landfill gas, trash, qualified hydropower, and marine and hydrokinetic facilities.  In addition, the election to claim the ITC in lieu of the PTC on these facilities was also extended to facilities where construction was commenced before January 1, 2018.

The ITC provisions were amended to extend the “commence construction” dates for 30% credits for fiber optic solar, qualified fuel cell, ground based thermal heating and cooling systems, and qualified small wind energy property to be consistent with solar facilities (terminating at the end of 2021). The Act also extended the “commence construction” dates for 10% credits relating to qualified microturbine and combined heat and power system property (also terminating at the end of 2021).  To be eligible for the extension, combined heat and power system property must be placed into service after December 31, 2016.

In addition, the credits for fiber optic solar, qualified fuel cell and qualified small wind project will step down over the next 5 years.  It also appears that any such property not placed in service by the end of 2023 will not be eligible for any ITC.

ACORE and Bloomberg New Energy Finance – State of the Industry Webinar: Financing Renewables Post-Tax Reform

On Wednesday, January 24, 2018 from 12:00-1:30pm ET, K&L Gates Seattle associate Elizabeth Crouse will be moderating the ACORE and Bloomberg New Energy Finance sponsored webinar “Financing Renewables Post-Tax Reform.”

The State of the Industry Webinar, a quarterly series produced in partnership between ACORE and Bloomberg New Energy Finance, offers the latest intelligence and analysis on renewable energy markets, finance and policy.

Provisions included in the tax reform package will affect how leading financiers of renewable energy projects are taxed on their investments. These changes could impact the availability of tax equity – a critical source of financing that is a significant catalyst for market growth and responsible for roughly 20% of annual U.S. renewable energy investment. On this webinar, experts will consider how changes to the tax code might shake out in the renewable energy market, alternate sources of project financing and other factors developers should expect in 2018 and beyond.

Policy Update:

Greg Wetstone, President & CEO, ACORE

Todd Foley, Senior Vice President of Policy and Government Affairs, ACORE

Markets Update:

Ethan Zindler, Head of Americas, Bloomberg New Energy Finance

Moderator:

Elizabeth Crouse, Associate, K&L Gates LLP

Speakers:

Marshal Salant, Managing Director, Head of Alternative Energy Finance, Citi

Meghan Schultz, Senior Vice President, Structured FinanceInvenergy LLC

Kevin Walsh, Managing Director, Renewable Energy, GE Energy Financial Services

To register for this webinar, please click here.

Tax Reform Goes to the President: How Did Renewables Fare?

By Charles H. Purcell, Rachel D. Trickett, and Elizabeth C. Crouse

On December 20, 2017, the U.S. House of Representatives voted to send the Tax Cuts and Jobs Act (the “Act”) to the president for his signature, which is the final step required to make the Act effective. What does the final bill mean for the renewable energy industry? The Investment Tax Credit (“ITC”) and the Production Tax Credit (“PTC”) appear to remain unchanged (for now) and the Base Erosion and Anti-Abuse Tax (aka, the BEAT or International AMT) in the final version of the Act is better for the renewables industry than in previous iterations. Nevertheless, a handful of other provisions may significantly impact the renewable energy industry.

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Tax Reform Conference Bill Released: PTC and ITC Emerge Battered

By Elizabeth C. Crouse

Earlier this evening, the conference committee considering the tax reform bills previously passed by the U.S. House of Representatives and the U.S. Senate released legislative text for the much rumored conference bill. Although neither the Production Tax Credit (“PTC”) nor the Investment Tax Credit (“ITC”) are directly impacted, the Base Erosion and Anti-Abuse Tax (often referred to as the “BEAT” or “International AMT”) provides only partial relief for U.S. corporations subject to that tax that have PTCs or ITCs available to offset their U.S. federal income tax.

Under the conference bill, a U.S. corporation that is subject to the International AMT may use up to the lesser of 80% of the PTCs and ITCs available to them or the “base erosion minimum tax amount” only through 2025. The PTC and ITC cannot be used to eliminate any International AMT otherwise due.

As in previous iterations of the Tax Cuts and Jobs Act, the conference bill does not distinguish between PTCs and ITCs earned in respect of qualifying projects that have already been placed in service or begun construction. In addition, although the International AMT rate has been adjusted (5% for tax years beginning in 2018, 10% for tax years beginning between 2019 and 2025, and 12.5% thereafter), the rate applicable to U.S. corporations that are in an affiliated group with any bank or registered securities dealer will always be 1% higher than the generally applicable rate. In addition, the PTC and ITC cannot be used to reduce the International AMT due in any tax year beginning in 2026 or thereafter.

Thus, although the impact of the International AMT is somewhat reduced in the conference bill, the International AMT could still prompt some multinational investors in renewable energy projects to divest certain operating projects and projects under development as well as discourage investment in new projects.

FERC FINDS CERTAIN PASSIVE INVESTMENTS DO NOT REQUIRE PRIOR APPROVAL FOR TRANSFER

By William M. Keyser, Molly Suda, Elizabeth P. Trinkle and Toks A. Arowojolu

On October 4, 2017, the Federal Energy Regulatory Commission (the “Commission”) issued an order allowing entities with certain passive investments to transfer those interests without receiving prior authorization from the Commission under Section 203 of the Federal Power Act (“FPA”). Specifically, the Commission found that passive tax equity interests in public utilities or public utility holding companies do not constitute voting securities for the purposes of Section 203. Thus, the transfer of these interests does not require Section 203 approval because such transfer does not constitute a transfer of control with respect to the public utility. In addition, the Commission found that the transfer of these passive investments by a holding company qualifies for blanket authorization under FPA Section 203 (a)(2).

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Senate Finance Committee Releases New technology-neutral Energy Credits Legislation

By Elizabeth C. Crouse and Mary Burke Baker

On Thursday, Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, released new technology-neutral energy credits legislation that would revolutionize the existing Investment Tax Credit and Production Tax Credit provisions. The legislation features a graduated credit rate schedule based on the level of carbon emissions as compared to a carbon emissions baseline (keyed to “current” national average carbon emissions) that would be available without regard to technology or energy input. In a move that is consistent with cutting-edge energy innovations and responsive to the needs and concerns of many large power consumers and utilities, the credits would expressly be available for energy storage and carbon capture technology installed at power plants placed in service before January 1, 2019. Energy storage would include hydroelectric pumped storage, thermal storage, fuel cells, and–crucially–batteries, among others. Under Wyden’s legislation, the maximum credit rates would be 30% for the ITC and, for the PTC, 2.3 cents per kilowatt hour of electricity produced. In addition, the PATH Act “sunset” provisions on the PTC and ITC would be repealed and the proposal would temporarily extend other energy provisions during a transition period.

The proposed legislation would also create a technology-neutral clean fuel production credit, homeowner versions of the ITC, performance-based incentives for energy efficiency improvements to residential and commercial buildings, and clean energy bonds generally based on existing government bonds frameworks.

Although there are differences of opinion in the Congress on whether the tax code should offer energy incentives, Sen. Wyden’s proposal could come into play this year either as part of tax reform or the infrastructure debate.  Senate Democrats recently released a blueprint for infrastructure that includes technology neutral energy reform.

Members of the K&L Gates LLP policy group are closely monitoring this and other tax and energy regulatory reform matters.

 

New Treasury Guidance Significantly Expands Field of Renewable Energy Projects That May Qualify for the PTC or ITC

On May 5, the U.S. Treasury Department released Notice 2016-31 to address certain changes made to the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) in the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, Pub. L. No. 114-113, Div. Q.  The Notice generally extends the application of the “beginning of construction” and “continuous construction” requirements set forth in Notices 2013-29, 2013-60, 2014-46, and 2015-25, and also favorably modifies several key factors of both requirements.  In addition, on May 18, the U.S. Treasury Department released a revised version of Notice 2016-31, which states that the provisions of Notice 2016-31 apply to any project for which a taxpayer claims the PTC or, via Code Section 48(a)(5), the ITC, that is placed in service after January 2, 2013.

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Treasury Department Issues New Guidance on PTC and ITC

Earlier today, May 5, the U.S. Treasury Department released Notice 2016-31 to address certain changes made to the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) in the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, Pub. L. No. 114-113, Div. Q.  The Notice generally extends the application of the “beginning of construction” and “continuous construction” requirements set forth in Notices 2013-29, 2013-60, 2014-46, and 2015-25, but also creates a few new provisions that apply to renewable energy projects seeking the PTC or ITC after the PATH Act revisions to the Internal Revenue Code.

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Winds of Change for Alternative Energy Tax Incentives in 2016

Congress has some unfinished business on alternative energy policy, which may provide unusual legislative opportunities in an election year. While tax credits for wind and solar power received long-term extensions in the year-end omnibus legislation enacted at the end of 2015, other types of alternative energy were left out — reports have suggested unintentionally — spurring some in Congress to seek a remedy in 2016. Additionally, the Department of the Treasury (“Treasury”) and the Internal Revenue Service (IRS) initiated a rulemaking process to further define and clarify the types of property qualifying for the investment tax credit (ITC) under section 48 of the Tax Code. These developments, along with ongoing congressional interest in comprehensive energy policy legislation, could make 2016 a pivotal year for stakeholders in the alternative energy industry.

Read the full alert on K&L Gates HUB

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