Orphan extenders

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Publication February 20, 2018

Various energy tax incentives were extended by Congress as part of a two-year budget deal in early February.

Developers of geothermal, biomass, landfill gas, waste-to-energy, incremental hydroelectric and ocean energy projects now have the option to claim production tax credits at the full rate on 10 years of electricity output or a 30% investment tax credit on any such projects that were under construction by the end of 2017. The deadline to start construction had been the end of 2016.

Developers of projects using fuel cells, small wind turbines or equipment that relies on fiber-optic distributed sunlight to illuminate the inside of a building can now claim a 30% investment tax credit on any such project that is under construction by the end of 2019. The credit drops to 26% for projects starting construction in 2020 and 22% in 2021. This is the same phase-out schedule as for solar projects.

Small cogeneration facilities — called “combined heat and power” or CHP projects — will qualify for a 10% investment tax credit if under construction by the end of 2021. Until this change, such projects had to be completed by the end of 2016. The full tax credit can be claimed on projects of up to 15 megawatts. The credit amount phases out as the generating capacity moves from 15 to 50 megawatts.


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