Non-residential solar projects now have more time to secure ITC with latest safe harbor extensions
The Treasury Department and the Internal Revenue Service (IRS) issued guidance this week extending the safe harbor provisions for non-residential solar projects under Section 48 of the Investment Allowance (ITC). This will address the impact of the COVID-19 pandemic, including project delays and supply shortages, which prevented some major projects from meeting deadlines to secure tax credits.
“The COVID pandemic disrupted supply chains, caused significant delays in permitting and jeopardized the timely completion of many renewable projects,” said Gregory Wetstone, president and CEO of advocacy group American Council on Renewable Energy (ACORE). “Today’s IRS notice, aimed at mitigating those COVID-related impacts, is a welcome development and will go a long way in ensuring these important clean energy projects are implemented.”
The new IRS guideline extends the safe harbor from four to six years for projects that started construction from 2016 to 2019. The safe harbor has been extended from four to five years for projects starting construction in 2020.
The announcement also offers a new choice to demonstrate continuous work, also known as a continuity requirement, on a project, providing the option to use one of the two standards regardless of how a previous decision was made on how to deal with it. to start construction.
“Many solar companies have experienced significant disruption to their project timelines due to COVID-19, and this new notification from the IRS will give them much-needed breathing room to complete these projects,” said Abigail Ross Hopper, president and CEO of advocacy group Association for Solar Energy Industries (SEIA). “Over the past year and a half, the pandemic has disrupted supply chains, shipping and construction activities, permit procedures and funding deadlines. Without clarity about the IRS’s safe harbor rules, some of these solar projects and the local economic benefits they bring would not have crossed the finish line. Companies now have the assurance they need to move these projects forward, and we thank our federal Treasury leaders for making this decision.”