in News Departments > Policy Watch
print the content item



President Obama has signed comprehensive tax legislation that includes a one-year extension of the American Recovery and Reinvestment Act's Section 1603 cash-grant program - an incentive suite that many say has kept wind power financing alive for the past several months.

The new law also allows a 100% depreciation bonus on new equipment placed in service after Sept. 8, 2010, through the end of next year. However, the bonus can be claimed only if the taxpayer was not committed on or before 2008 under a binding contract to invest in the project.

The bonus is a timing benefit. Instead of depreciating a project over the normal depreciation period, the entire cost can be deducted in the year the project goes into service.
However, the deadlines to complete construction have not changed. They remain the end of 2012 for wind farms, 2016 for solar and fuel-cell projects and 2013 for other renewables.

The 100% depreciation bonus is equivalent to an additional 5.2% investment tax credit on a wind farm or solar project - if a developer can use it. Many developers are expected to have a hard time converting the bonus into cash in the tax-equity market. Some developers are also concerned that the bonus could reduce overall tax capacity in the market.

A number of other provisions in the law will affect the project finance market, including the following:

- Projects on Native American reservations will qualify for faster depreciation (e.g., three-year instead of five-year depreciation for wind farms and solar projects), provided they are completed by December 2011;

- The law authorizes another $3.5 billion in additional "new markets tax credits" in 2010 and 2011, each as an inducement to make loans or equity investments in projects in census tracts with lower-than-average family incomes or with poverty rates of at least 20%; and

- The law gives utilities more time, through December 2011, to shed transmission assets to independent transmission companies or regional transmission organizations and spread the tax on any gain over eight years.

Keith Martin is a partner in the Washington, D.C., office of Chadbourne & Parke. He can be reached at (202) 974-5674.



Trachte Inc._id1770
Latest Top Stories

Wind And Solar Are Catching Up With Nuclear Power, Says Report

A new report from the Worldwatch Institute says nuclear energy's share of global power production is steadily shrinking. Meanwhile, renewables' share keeps growing.


Could New Desert Plan Spell The End Of California Wind Energy Development?

The California Wind Energy Association says it is disappointed with the draft Desert Renewable Energy Conservation Plan, which was recently released by state and federal agencies.


New U.S. House Bill Includes Wind PTC Extension

U.S. representatives have introduced the Bridge to a Clean Energy Future Act of 2014, which would extend the production tax credit (PTC) and other provisions through 2016.


Utility-Scale Wind And Solar Keep Getting Cheaper

A new study measures the levelized cost of energy from various technologies and suggests that the costs of utility-scale wind and solar power are catching up with those of traditional sources, even without subsidies.


The Song Remains The Same: Ontario Seeks More Science Before Lifting Offshore Ban

The Ontario government says the nearly four-year-old offshore wind moratorium will remain in place until the province fully understands the technology’s impact on the environment.

Renewable NRG_id1934
Canwea_id1984
Future Energy_id2008