Tax equity investments, and potentially other passive investments, in renewable energy just became that much easier to make. Today, in response to a petition for declaratory order filed in January 2017 by a coalition of investors and project sponsors, FERC ruled that tax equity investments in public utilities does not trigger section 203 of the
tax
California Court of Appeals Upholds California’s Cap-and-Trade Program
On Thursday, a 2-1 decision by the Third District Court of Appeal in Sacramento upheld California’s program to reduce carbon emissions. California’s controversial and signature cap-and-trade program creates a firm limit on carbon emissions and auctions allowances that permit companies to release greenhouse gases into the atmosphere. Covered entities are generally large emitters of greenhouse gases, who under the program must surrender emissions allowances or offset credits to cover their emissions, or face monetary penalties or other negative consequences. Auctions are a key component of how California expects to meet its targets to reduce emissions to 1990 levels by 2020, and 40 percent below 1990 levels by 2030.
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IRS Opens Door for Community Solar Investors to Qualify for Federal Tax Credits
The Internal Revenue Service issued a private letter ruling this week to an individual owner of solar panels installed in an off-site net-metered community solar garden. In the Ruling, the Service confirmed the individual’s eligibility to claim the residential income tax credit for 30 percent of qualified solar electric property expenditures pursuant to Section 25D of the Internal Revenue Code.
The Ruling is significant in several respects:
- it confirms that an individual who owns only some of the solar panels and other property comprising a community solar garden may claim the credit,
- it appears not to require direct tracking of the electricity produced by the taxpayer’s solar panels and, instead, permits allocation of the aggregate amount of electricity produced by the array based on the number of panels owned by the taxpayer, and
- it does not require the taxpayer to contractually agree with the utility that the taxpayer owns the electricity produced by the taxpayer’s panels until drawn from the grid at his residence.
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Tentative Ruling Issued in California Cap and Trade Auction Lawsuit
A tentative ruling was issued yesterday in the related cases California Chamber of Commerce v. California Air Resources Board (ARB) and Morning Star Packing Co. v. ARB, pending before the Sacramento County Superior Court. The cases challenge the legality of ARB’s cap and trade auctions under two theories: (1) the cap and trade auctions…
IRS Likely to Supplement “Beginning Construction” Guidance
As most of you are aware, Congress in the "American Taxpayer Relief Act of 2012" eliminated the "placed in service" deadline for purposes of the renewable energy tax credits. In its place, Congress required for purposes of the production tax credit (section 45) and the elective investment tax credit (section 48), that taxpayers "begin construction"…
IRS Issues Clarification Regarding “Binding Written Contract” in its “Start of Construction” Guidance for PTC or ITC Energy Credits
As we originally noted, the IRS guidance issued April 15 regarding the "start of construction" requirement for energy projects to qualify for PTC or ITC contained a "big surprise" regarding its definition of a binding contract. Unlike previous incentive programs, the guidance provided that contracts that limit damages to a specified amount, such as…
Phase II – 48C credits
As you may have heard, the IRS and DOE have announced a second allocation of "Advanced Energy Project Tax Credits" – also known as 48C credits. The 48C credit was enacted as part of the stimulus bill (ARRA) in 2009 and the first allocation was made in 2010. Phase II is being held because a…
Stoel Rives Opens Office in Washington, D.C.
We are pleased to announce that we have opened a satellite office in Washington, D.C. Our new address, effective immediately:
Stoel Rives LLP
1020 19th Street NW, Suite 375
Washington, DC 20036
Phone: (202) 398-1795 / Fax: (202) 621-6394
The new office is headed by firm partner Greg Jenner, a former Deputy Assistant Secretary…
Fiscal Cliff Bill Includes PTC Extension and Other Energy-Related Provisions
Congress yesterday passed the American Taxpayer Relief Act of 2012 (the Act), which averted the so-called “fiscal cliff.” The President is expected to sign the Act shortly.
The Act includes a number of energy-related tax provisions, including a one-year extension and modification of the production tax credit under Section 45 of the Internal Revenue Code (the PTC) for certain renewable energy facilities. The energy-related provisions in the Act include:
- PTC Extensions and Modifications – The PTC is extended and modified for certain types of facilities. These extensions and modifications include:
- In the case of wind, geothermal, landfill gas, trash, marine, and hydrokinetic facilities and certain closed-loop biomass, open-loop biomass, and qualified hydropower facilities, the PTC will apply if construction begins before January 1, 2014 (rather than if the facilities are placed in service before January 1, 2014). The Act does not specify what it means to begin construction for this purpose, although there are analogous authorities that have been adopted for other purposes that may be applied. Note, however, that a facility to which this extension applies may qualify for the PTC even if it is not placed in service before January 1, 2014.
- The PTC for municipal solid waste facilities is modified to exclude from the definition of municipal solid waste certain paper that is commonly recycled and that has been segregated from other solid waste.
- The election to claim the investment tax credit rather than the PTC for certain facilities is extended to apply to certain facilities with respect to which construction begins prior to January 1, 2014.
- The PTC for Indian coal production facilities is extended for one year, to apply to sales of qualified production during the eight-year period (rather than the previous seven-year period) beginning on January 1, 2006.
- In the case of wind, geothermal, landfill gas, trash, marine, and hydrokinetic facilities and certain closed-loop biomass, open-loop biomass, and qualified hydropower facilities, the PTC will apply if construction begins before January 1, 2014 (rather than if the facilities are placed in service before January 1, 2014). The Act does not specify what it means to begin construction for this purpose, although there are analogous authorities that have been adopted for other purposes that may be applied. Note, however, that a facility to which this extension applies may qualify for the PTC even if it is not placed in service before January 1, 2014.
Continue Reading Fiscal Cliff Bill Includes PTC Extension and Other Energy-Related Provisions
Congress Passes Extension and Modification of Production Tax Credit
News reports have already alerted people to the fact that Congress has extended the Production Tax Credit ("PTC") for wind as part of its agreement to avoid the fiscal cliff. The bill – named the American Tax Relief Act of 2012 – extended the sunset date for wind through December 31, 2013. This extension gives…