On August 2nd the Senate Finance Committee voted to renew the wind power production tax credit that is set to expire at the end of this year with the proposed Wind Powering America Jobs Act. The bill is expected to go to the Senate floor when Congress returns from summer recess. Wind farms can generally choose to receive a continuing credit of 2.2 cents per kilowatt-hour of electricity produced or receive a one-time payment equivalent to 30 percent of the cost of developing a project. Currently the production tax credit and the option to elect the 30 percent renewable energy investment tax credit will expire at the end of 2012. In contract, the renewable energy investment tax credit for solar projects will continue through the end of 2016. However, it is unclear if the House will support a renewal of the wind production tax credit.
The expiration of the Section 1603 grant in lieu of the federal renewable energy tax credit has had a substantial adverse impact on the development of renewable energy projects in the Country. While some projects were able to grandfather the benefits of the Section 1603 grant by incurring the required costs in 2011, these projects will disappear during the year. In addition, although the grant provides money in lieu of the tax credit it does not monetize the losses associated with the project which most developers do not have the taxable income to use. As a result, less equity is generated for these projects. Historically the renewable tax credit investment community has serviced the very large utility size projects and not the middle market. Duane Morris attorneys are working with investors in the low-income housing, historic, and new markets tax credit industries to educate these investors to the structures and opportunities available for middle market renewable energy tax credit transactions. It is hoped that in the near future a group of investors will emerge to service middle market renewable energy tax credit transactions.