Renewable Electricity Production Tax Credit (PTC)

The federal renewable electricity  Production Tax Credit (PTC) is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. The duration of the credit is 10 years after the date the facility is placed in service for all facilities placed in service after August 8, 2005.

Originally enacted in 1992, the PTC has been renewed and expanded numerous times, most recently by the American Recovery and Reinvestment Act of 2009 (H.R. 1 Div. B, Section 1101 & 1102) in February 2009 (often referred to as "ARRA"), the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 407) in January 2013, the Tax Increase Prevention Act of 2014 (H.R. 5771, Sec. 155) in December 2014.

In December 2015, the Consolidated Appropriations Act, 2016 extended the expiration date for the PTC to December 31, 2019 for wind facilities commencing construction, with a phase-down beginning for wind projects commencing construction after December 31, 2016. The Act extended the tax credit for other eligible renewable energy technologies commencing construction through December 31, 2016. The Act applies retroactively to January 1, 2015.

Business Energy Investment Tax Credit

The federal business energy Investment Tax Credit (ITC) available under 26 USC § 48 was expanded significantly by the Energy Improvement and Extension Act of 2008 (H.R. 1424), enacted in October 2008. This law extended by eight years the duration of the existing credits for solar energy, fuel cells and microturbines; increased the credit amount for fuel cells; established new credits for small wind-energy systems, geothermal heat pumps, and combined heat and power systems; allowed utilities to use the credits; and allowed taxpayers to take the credit against the alternative minimum tax, subject to certain limitations. The credit was further expanded by the American Recovery and Reinvestment Act of 2009, enacted in February 2009.

The Consolidated Appropriations Act, signed in December 2015, included several amendments to this credit which apply to solar technologies and PTC-eligible technologies. In particular, the expiration date for these technologies was extended, with a gradual step down of the credits between 2019 and 2022.