WIND DEVELOPERS got more good news from the IRS.

WIND DEVELOPERS got more good news from the IRS.

February 01, 2002
WIND DEVELOPERS got more good news from the IRS.

Wind projects qualify for section 45 tax credits in the US. This is a tax credit of 1.7¢ a kilowatt hour for electricity generated. The credits run for 10 years after a project is placed in service.

However, the credits are subject to a “haircut” in amount if the project also benefits from government grants, tax-exempt financing, other tax credits or subsidized energy financing.

The IRS said in a private ruling made public in mid-January that there was no haircut in a case where a wind developer received a grant from a nonprofit entity set up and funded by an investor-owned utility. The utility set up the organization to encourage renewable energy projects. It was part of a deal with state regulators in exchange for permission to let the utility restructure. The IRS said the fact that the organization was set up as part of a deal with state regulators did not transform it into a government program.

The ruling is PLR 200202048. It follows on the heels of another ruling late last year in which the IRS said the fact that a state awarded generators using renewable energy negotiable “credits” that could be sold to utilities for cash also did not require a haircut.

Keith Martin