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A brief sheet on the ITC and PTC extension

Published July 2016

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The essentials

  • On December 18, 2015, Congress passed The Consolidated Appropriations Act which extended Investment and Production Tax Credits for select renewable energies, effective through 2020.
  • An Investment Tax Credit (ITC) allows a taxpayer to take a certain percentage of an investment or purchase from his taxes. Similarly, a Production Tax Credit (PTC) is a tax reduction by a given amount per unit of a good produced.
  • The Act extends the current 30 percent ITC for qualifying solar energy facilities to 2019. It then creates a phase out program where the ITC is reduced to increasingly lower values until 2022. This ITC also applies to qualifying hydroelectric, biofuel, and methane recapturing programs.
  • The Act also extends the current PTC for wind and other qualifying facilities for another year. Thereafter, the PTC is incrementally reduced before being completely phased out in 2020.
  • The Act also includes an unrelated provision which lifts a 40 year ban on the exportation of crude oil from the U.S. While this seems to be at odds with the favorable renewable energy provisions of the Act, the wind industry has viewed this as an acceptable tradeoff and a net win for the environment.
  • The Act is expected to create $73 billion in new renewable energy investment, 8 million more households powered by renewable energy, and 37 gigawatts of new wind and solar capacity.