Renewable Electricity Production Tax Credit Information

Renewable Electricity Production Tax Credit

Information provided is for background reference only; consult a tax professional for guidance.

The renewable electricity production tax credit (PTC) is a per kilowatt-hour (kWh) federal tax credit included under Section 45 of the U.S. tax code for electricity generated by qualified renewable energy resources. The PTC provides a corporate tax credit of 1.3 cents/kWh for electricity generated from landfill gas (LFG), open-loop biomass, municipal solid waste resources, qualified hydroelectric, and marine and hydrokinetic (150 kW or larger). Electricity from wind, closed-loop biomass and geothermal resources receive as much as 2.5 cents/kWh. The PTC is phased down (40%) for wind facilities and expires for all renewable energy technologies commencing construction after December 31, 2021.

On April 15, 2013, the IRS released guidance for how it determines eligibility for the PTC for renewable energy projects. To qualify, a facility must have begun construction before a specific date. A project is considered under construction if "physical work of a significant nature has begun" or at least 5% of the total cost of the project has been incurred. See Notice 2013-29 at https://www.irs.gov/irb/2013-20_IRB. The IRS released additional guidance on September 20, 2013 clarifying how a taxpayer satisfies these criteria. See Notice 2013-60 at https://www.irs.gov/pub/irs-drop/n-13-60.pdf (pdf).

Additional information regarding the PTC can be found online using the Database of State Incentives for Renewables & Efficiency (DSIRE) at https://programs.dsireusa.org/system/program/detail/734.