Updated guidance from the IRS (Notice 2015-25) regarding the “beginning of construction” requirement for the production tax credit (PTC) was released March 11 as anticipated.  This was exciting news for the wind industry that has been working hard to secure project financing and stay on schedule to meet critical development and construction milestones.  Without this guidance, tax equity partners were largely unwilling to accept the risk causing project development to slow to a crawl during the first quarter of this year.

The industry was similarly held hostage back in 2013 until the IRS issued Notice 2013-60 late that September. Like Notice 2015-25, Notice 2013-60 clarified PTC terminology specifically related to “continuous efforts” and “continuous construction.”  After struggling most of the year to interpret the 2013 PTC extension, developers were essentially left with three months to complete financing and start construction before year end to qualify. 

Many in the industry were expecting a two-year PTC extension in 2014.  Instead, legislators passed a one-year retroactive bill in late December which, for all intents and purposes, equated to a three-week extension. Even though that three-week push to start construction was arduous, many developers were successful in getting their projects going.  Westwood helped more than 35 projects get grading permits during that time.

The latest Notice 2015-25 is not as valuable as a long-term PTC extension, but receiving guidance during first quarter instead of the fourth is a plus for the industry. This year, developers will have most of the year to finish financing, permitting, and design for the balance of their projects.