The renewable industry remains abuzz about the American Tax Payer Relief Act that included the extension and modification of energy tax provisions. The tax extenders make investing in the renewables industry and in energy efficiency technologies a good move. Why? The firm of Faegre Baker Daniels LLP put together a brief overview of several key provisions that aid the industry for the next year and beyond.
- Production Tax Credit (PTC) — is a per-kilowatt hour incentive for the generation of electricity from qualified, renewable sources. The wind PTC was extended through 2013. In addition, the trigger for eligibility was changed to the start of construction of the facilities instead of the production of the electricity which significantly extends the use of the credit. The Treasury Department and the Internal Revenue Service will issue rulemakings clarifying this important change. Finally, the law amends the definition of municipal solid waste facilities to remove recyclable paper as an eligible feedstock.
- Investment Tax Credit in Lieu of Production Tax Credit — Solar facilities can currently qualify for an investment tax credit of 30 percent of the cost of investment when a facility is placed in service. The law enables other renewable generation facilities to opt for this investment tax credit as opposed to the PTC mentioned above.
- Indian Country Coal Production Credit — The law extends a provision that enables Indian tribes to qualify for a PTC equal to $2 per ton of coal sourced through their land through the end of 2013.
- Energy Efficient Improvements to Existing Homes (25C) — The tax credit for installing energy efficient improvements to existing homes — such as improved HVAC units, windows, furnaces, and heat and water pumps — was extended through 2013 and is capped at $500. The law also updated the standards that such appliances would need to achieve to be eligible for the incentive.
- New Energy Efficient Homes Credit — The law extends through 2013 the tax incentive for the production of energy efficient homes. To be eligible, new homes must achieve a 30 percent or 50 percent improvement over heating or cooling energy usage of a comparable residence. The level of efficiency determines the value of the credit.
- Energy Efficient Appliance Credit — The tax credit for U.S.-manufactured, energy-efficient appliances was extended through 2013. This credit includes refrigerators, dishwashers and clothes washers. Continue reading