The world needs energy, and increasingly more of it, but people are becoming concerned that the production of energy be done responsibly. A growing trend involves efforts to create more energy from renewable sources in hopes of both creating the energy we need without damaging the environment in which we live. The new Biden administration is clearly signaling that renewable energy will be a key focus of its plan going forward. For example, the Biden administration has set a goal to deploy 30 gigawatts of offshore wind generation capacity by the year 2030. Therefore, it can be expected that tax advisors will be seeing more questions about renewable energy tax incentives as investment in the sector increases. A large driver of investment in renewable energy is caused by specific tax credits offered as part of the deal structure. However, tax credits are strictly construed by both the IRS and the courts and must follow specific guidelines. Therefore, if the partnership, associated agreements, and negotiations and dealings among the investors and developers of renewable energy are not done properly the tax benefits might disappear.

Originally Published in Taxes The Tax Magazine.