IRS issues 2017 production tax credits, ups closed-loop biomass

By Anna Simet | April 19, 2017

The Internal Revenue Service has published guidance pertaining to the Section 45 Production Tax Credit for 2017.

The PTC, last extended under the Obama administration in late 2015, provides a per-kilowatt-hour tax credit for electricity generated by qualified energy resources and sold to an unrelated entity during the taxable year. Via the last extension, qualified facilities must have begun construction by the IRS prior to January 1, 2017.  

The IRS defines beginning construction as either starting physical work of a significant nature, or paying or incurring 5 percent or more of the total cost of the facility. For biomass and waste-to-energy facilities, IRS defines a significant nature as including the performance of site improvements such as filling or compacting soil, or installing stack piling. 

Facilities that qualify for the PTC are eligible to receive the credit for the first 10 years of operation.

According to the notice, published in the Federal Registrar, in the case of electricity produced from wind, closed-loop biomass and geothermal, the tax credit has been raised from 2.3 cents per kilowatt-hour (kWh) in 2016 to 2.4 cents per kWh.

For electricity produced from open-loop biomass, small irrigation, landfill gas facilities, trash facilities, qualified hydropower facilities, and marine and hydrokinetic renewable energy facilities, the tax credit remains unchanged at 1.2 cents per kWh in 2017.