Congress extends tax credits for wind and solar energy projects, but will phase the credits out over several years.

The Consolidated Appropriations Act, 2016 (the Act), which President Obama signed into law on December 18, 2015, re-enacts the production tax credit (PTC) and investment tax credit (ITC) for wind energy projects and modifies and extends the 30% ITC for solar energy projects. For both resources, the Act generally provides a five-year extension, with a step-down in the amount of credit available depending on when construction of a project commences. For solar energy projects, the Act modifies the eligibility rules from a “placed-in-service” requirement to a “begun-construction” requirement, similar to the existing rules for wind energy credits. Assuming the Internal Revenue Service (IRS) adopts guidance similar to the existing guidance for wind energy credits, the Act’s changes generally will allow developers at least seven years to complete new and existing projects.