On December 17, 2019, lawmakers on Capitol Hill agreed to a tax extenders package that is expected to be passed by the House and the Senate in the coming days as part of the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (the Act). A summary of some of the key renewable energy provisions contained within the Act follows. The changes are retroactive to January 1, 2018, if the Act is passed into law.

Extension of the Section 45 Production Tax Credit (PTC)

The Act provides a one-year extension of the PTC for qualified wind facilities such that qualified wind facilities that begin construction in 2020 will be eligible for PTCs at the 60 percent rate. Note this means that, as drafted, the Act would provide a higher PTC rate (60 percent) for projects beginning construction in 2020 than those that began construction in 2019 (40 percent).

The Act also extends the PTC for certain section 45(d) qualified facilities for which construction begins before January 1, 2021, including: closed and open loop biomass, geothermal, landfill gas, trash, and hydropower and marine and hydrokinetic renewable energy.

One Year Extension of Election to Take the Section 48 Investment Tax Credit (ITC) in Lieu of the PTC

The Act extends taxpayers' ability under section 48(a)(5)(C)(ii) to elect to treat the qualified facilities described immediately above as energy property eligible for the ITC in cases in which the construction begins before January 1, 2021.

No Extension or Expansion of the ITC

The Act does not extend the ITC. As such, the ITC rate for energy property the construction of which begins in 2020 or 2021 and which is placed in service before January 1, 2024 remains unchanged at 26 percent and 22 percent, respectively. Projects which begin construction before January 1, 2022 but which are not placed in service before January 1, 2024 or which begin construction after January 1, 2022, are eligible for the 10 percent ITC as before.

Similarly, the Act does not extend the section 25D tax credit for qualified residential solar electric, solar thermal, wind, fuel cell, and geothermal property expenditures.

No Change to the ITC for Energy Storage Systems

The Act contains no provision for a standalone ITC for energy storage systems. Moreover, the Act does not provide for any expansion of the existing ITC (for energy storage systems or otherwise).

No Changes to Qualified Improvement Property

The Act also does not correct the "retail glitch" enacted with respect to "qualified improvement property" as part of the Tax Cuts and Jobs Act of 2017. As such, there remains an issue as to whether "qualified improvement property" should be treated as 15-year property eligible for bonus depreciation.