2021 PTC inflation adjustments
Production tax credits for producing renewable electricity will remain at the same level this year as last year.
Refined coal tax credits will increase slightly.
Production tax credits for generating electricity from wind, geothermal steam or fluid or closed-loop biomass (plants grown to be used as fuel in power plants) will remain 2.5¢ a kilowatt hour in 2021, the same amount as in 2020. They will remain at 1.3¢ a kilowatt hour for generating electricity from open-loop biomass, landfill gas, incremental hydropower and ocean energy.
The credits are adjusted each year for inflation as measured by the GDP price deflator. They run for 10 years after a project is originally placed in service.
The credits phase out if contracted electricity prices from a particular resource reach a certain level. That level for wind in 2021 is 13.5¢ a KWh. The IRS said there will not be any phase out in 2021 because contracted wind electricity prices were 3.59¢ a KWh going into 2021. It said it lacks data on contracted prices for electricity from the other energy sources.
Production tax credits for producing refined coal are $7.384 a ton in 2021. Refined coal is coal that has been treated with chemicals to make it less polluting than regular coal. The IRS said there will not be any phase out of refined coal credits in 2021. The refined coal credit phases out as the reference price for raw coal moves above 1.7 times the 2002 price of raw coal. The 2021 reference price is $45.64 a ton. A phase out would have started at $91.53 a ton.
The tax credit amounts were published in the Federal Register on April 27.