IRS acknowledges PTC increase
The IRS said this afternoon that production tax credits on new wind, solar, geothermal and closed-loop biomass power plants put in service in 2022 are 2.75¢ cents a KWh. PTCs are claimed for 10 years on the electricity output.
The Inflation Reduction Act adopted a new rounding convention to adjust the PTC amount for inflation.
The IRS had previously announced PTCs would be 2.6¢ for electricity sold this year.
The new rounding convention increased the amount to 2.75¢, but only for new facilities placed in service in 2022. It remains at 2.6¢ for electricity sold this year from older projects.
The Senate and House tax committee staffs have said that the new rounding convention was a mistake and that they will attempt to make a technical correction. However, Republicans are not expected to allow technical corrections. In light of that, it was interesting to see the IRS acknowledge the increase this afternoon.
PTCs on new facilities put in service this year that generate electricity from open-loop biomass, landfill gas, municipal solid waste or water are 1.25¢ for electricity sold in 2022.
Such projects qualify for PTCs at half the full rate. Closed-loop biomass projects are projects that use plants grown exclusively for use to fuel power plants.