IRS extends safe harbour for solar projects under ITC notice

The IRS notice will provide greater support for solar developers whose construction has been delayed by COVID-19. Image: Steve Buissinne

The US Internal Revenue Service (IRS) has extended the safe harbour period for solar projects under the investment tax credit (ITC), providing support for projects that have been disrupted by the pandemic.

In response to COVID-19, the safe harbour period for solar projects which began construction between 2016-2020 would be extended. For properties that started construction between 2016-2019, safe harbour is extended from four to six years, while those started in 2020 set to receive one additional year’s grace, taking the total to five years.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

“The Notice provides much anticipated and welcome relief for taxpayers developing projects that have been delayed by circumstances related to COVID-19,” said law firm Stoel Rives in an analysis of the announcement.

Notice 2021-41 also presented new options for developers to demonstrate the continuity of their construction efforts, allowing them to use either of the two available standards, regardless of how earlier decisions were made.

Previous IRS notices recognised the construction of a project if physical work of a substantial nature had begun, or if the taxpayer had paid 5% of the total cost of a project.

But the notice does clarify that, failing safe harbour principles being proven, the continuity requirement is met if the developer demonstrates either continuous construction or the continuous efforts tests, regardless of previous assessments.

“This new notice from the IRS will give them much-needed breathing room to complete these projects,” a Solar Energy Industries Association (SEIA) spokesperson said.

21 May 2024
PV Tech has been running PV ModuleTech Conferences since 2017. PV ModuleTech USA, on 21-22 May 2024, will be our third PV ModulelTech conference dedicated to the U.S. utility scale solar sector. The event will gather the key stakeholders from solar developers, solar asset owners and investors, PV manufacturing, policy-making and and all interested downstream channels and third-party entities. The goal is simple: to map out the PV module supply channels to the U.S. out to 2025 and beyond.

Read Next

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 28, 2024
Seattle, USA
Solar Media Events
March 12, 2024
Frankfurt, Germany
Upcoming Webinars
March 13, 2024
9am EDT / 1pm GMT / 2pm CET
Solar Media Events
March 19, 2024
Texas, USA