House Democrats warn tax credit ambiguity sidelines renewables investment

A House Democratic caucus called on tax writers Friday to quickly interpret language in a recently passed renewable energy tax credit.

At issue is a change in the production tax credit, which was extended for one year in January. Renewable energy projects, such as wind, biomass and geothermal, can now collect the incentive if the development begins construction this year. Previously, those projects needed to produce power by the end of the year.

But the ambiguity of what constitutes “commenced construction” has kept developers waiting, 30 members of the Sustainable Energy and Environment Coalition wrote to the IRS and Treasury Department.

“As supporters of clean energy development and production, we believe it is critical to develop and maintain policies that move our country toward a clean energy future. Because the PTC (production tax credit) has been extended for one year only, it is imperative that you work to clarify the specific criteria that will define the commencement of construction as soon as possible,” the lawmakers wrote.

Differing interpretations exist as to what qualifies as “commenced construction.” Some experts say developers need only invest 5 percent of the total project cost, while others contend physical construction must be underway.

The wind industry and its congressional allies lobbied hard for the credit extension and the language change last Congress. Supporters worry that too much delay in determining what “commenced construction” means will blunt new installations for this year.

The threat of the credit’s expiration helped drive a record amount of new wind generation capacity last year, the American Wind Energy Association said Wednesday. But that uncertainty also stunted investment for this year, as planned installations plummeted for 2013.