In exciting news for the renewable energy industry, last Friday Congress passed (and the President signed) the $1.15 trillion federal spending bill that continued tax credits for renewable energy development. We consider these credits a powerful and useful incentive to continue the country’s momentum toward less dependence on fossil fuels and nuclear power.
In the solar space, full 30% credits will still be available for commercial and residential solar arrays through 2019. Beyond that, the credits will taper off to 2022, where they will settle at 10% for commercial development placed in service by December 31, 2023. With that legislation, we expect a boost of activity in this area.
Residential customers who lease their solar arrays won’t get the credit directly. Instead, it will be available to the company that finances the solar array. This may produce a hot market for leasing finance companies to partner with manufacturers and installers in the residential sector.
While the tax credits for wind projects won’t last as long, they will be available at 2.3 cents for each kilowatt-hour generated into 2016, then decline until they are gone in 2020. These credits technically expired at the end of the 2014 tax year, but now will apply to generation in this year and for the next five.
All in all, the new federal budget holds some really good news for the renewable energy industry, where many of our clients are making progress. If you have questions about the new budget or renewable energy development and legal issues, please contact one of our energy and utility lawyers. If you want to know more about how the tax credits may affect you, please consult your tax advisors.