• The Production Tax Credit (PTC) for wind energy was created in the Energy Policy Act of 1992.
• The PTC provides operators with a tax credit per kilowatt-hour (kWh) of renewable electricity generation for the first 10 years a facility is in operation.
• At its inception the credit was for a value of 1.5 cents/kWh. The inflation-adjusted figure is 2.5 cents/kWh in 2020.
• The PTC was scheduled to expire in the year 2000, but Congress has extended its lifespan repeatedly, most recently at the end of 2019.
• In 2015, Congress created a phase-out framework that gives new facilities a smaller portion of the full credit in each successive year.
• The framework now has an “in by” date of December 31, 2020.
• Facilities under continuous construction by that date will be entitled to the PTC for ten years once generation begins, meaning the credit will be available into the 2030s. Some facilities are likely to receive the credit through 2033.
• Current credit rates are as follows:
If construction begins: The estimated allowable tax credit is:
After Dec. 31, 2016 1.9 cents/kWh
By Dec. 31, 2017 1.8 cents/kWh
By Dec. 31, 2018 1.4 cents/kWh
By Dec. 31, 2019 1 cent/kWh
By Dec. 31, 2020 1.5 cents/kWh
• The U.S. Treasury estimates that the Production Tax Credit will cost taxpayers $40.12 billion from 2018 to 2027.