IRS issues guidance on procedures for electing the ITC in lieu of the PTC

June 11, 2009 - 10:45am -- Anonymous

On June 5, 2009 the Internal Revenue Service issued Notice 2009-52 which provides guidance on how a taxpayer can elect a 30% investment tax credit (ITC) in lieu of a production tax credit (PTC) for a qualified renewable energy facility. This election was created in the American Recovery and Reinvestment Act of 2009.

Whether the ITC or the PTC will be more beneficial to the project owner depends on a variety of factors including project financing structure, estimated production, and business model. The National Renewable Energy Laboratory has published a more in-depth report that evaluates these alternatives. 

It is worth noting that this notice provides guidance only on the procedures for making this election. This must be done for each "qualifying facility". It is not clear at this point whether that means a single wind turbine, or a single project regardless of the number of turbines.

For more information read the alerts by Fredrickson & ByronFulbright & Jaworski, and Stoel Rives

We are still waiting for guidance from the IRS on the Treasury grant progarm that would allow a taxpayer to elect to recieve the value of the ITC as a cash grant. This has the potential to provide significant financing incentives for Community Wind. We will update our information as those notices are released.