Nonsolar energy investment tax credit still in limbo
Extension of tax credit for certain renewables pulled from FAA bill
TAX ALERT |
When Congress passed the Protecting Americans from Tax Hikes (PATH) Act as part of the broader omnibus funding legislation in December 2015, many investors and companies involved in the renewable energy sector were pleased to see an extension of the 30 percent investment tax credit for solar through 2019 and then phased down to 26 percent in 2020, 22 percent in 2021, and 10 percent thereafter.
What was disappointing, however, was that the investment tax credit for other types of renewable energy property that expires for property placed in service after 2016 was not further extended as part of the PATH Act. This would include the following types of renewable energy property:
- Fiber-optic solar energy lighting
- Equipment to produce energy from geothermal deposits
- Qualified fuel cell property
- Qualified microturbine property
- Combined heat and power system (CHP) property
- Qualified small wind energy property
- Equipment which uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure
It was believed that Congressional leaders had agreed on a deal to include these remaining extenders as part of the Federal Aviation Administration (FAA) reauthorization bill (HR 636). Recent lobbying by several pro oil industry groups, however, caused several senators to withdraw their support for including the extenders and advancing a clean FAA bill instead. Whether these extenders can be resurrected and attached to another bill remains to be seen.
In the meantime, sponsors of projects involving these types of renewables will need to move fast to place projects in service by the end of 2016 in order to be eligible for the investment tax credit.