The U.S. Treasury Department released guidance Wednesday that offers onshore wind and solar projects more time to meet tax credit deadlines, an acknowledgment of the challenges brought by the coronavirus lockdown.

Wind was the big winner: Onshore projects that started construction in 2016 and 2017 will now have five rather than four years to finish construction while still receiving their Production Tax Credit (PTC) benefits.

Solar developers got some help too, with the IRS allowing equipment bought in 2019 to be delivered into October 2020 while still retaining its eligibility for the Investment Tax Credit (ITC).

With the PTC set to step down, the American wind industry was scrambling to put about 15 gigawatts into service this year. Analysts say Treasury’s move will not significantly change that landscape, because for the most part wind projects have not seen extended delays stemming from COVID-19 lockdowns.

"It doesn't wildly change things," said Max Cohen, a wind analyst at Wood Mackenzie Power & Renewables. “You don’t delay into next year just because you can; you do it only if there's good reason to. And generally, it seems the industry is rallying to get things done.”

Still, the guidance, requested by members of Congress and encouraged by the clean energy industry, will offer developers comfort as they recover from extended coronavirus shutdowns.

In releasing the guidance, the Treasury Department and the IRS specifically noted the effects of coronavirus-related delays, which the administration said were “resulting in significant impacts on project financing and development.”

While most delays for wind projects have been weeks rather than months, Cohen said the extended timeline may allow for the completion of lower-priority onshore wind projects that may have been dumped in favor of more valuable installations. WoodMac has increased its wind forecasts for 2020, 2021 and 2022, in part due to the new guidance, expecting installers to complete just over 15 gigawatts this year, 14 gigawatts in 2021 and a little more than 6.9 gigawatts in 2022.

The guidance may have favored wind because the industry “was in a bind,” rushing to finish projects ahead of the 2020 deadline, said Kevin Pearson, a partner at law firm Stoel Rives.

Solar sector gets more ITC clarity

Lawmakers sent letters to Treasury asking that both wind and solar receive relief in the form of updated IRS guidance, though an April letter that more specifically targeted wind received more signatories than a May letter geared toward solar.

“There are at least some members of Congress who are very interested in making sure that there are incentives for renewable energy and that people can use them,” said Pearson.

At the end of 2019, lawmakers did not extend the solar industry’s tax credit but did give wind one more year to qualify for its credit. It’s unclear whether this latest guidance will impact the industry’s future chances at tax credit extensions.

Still, the guidance should also reassure an anxious solar industry. The guidance on equipment timing offers solar “an additional layer of clarity,” said Erin Duncan, vice president of congressional affairs at the trade group Solar Energy Industries Association.

The organization, which has led the charge for an ITC extension, hinted that it will continue to push for congressional action. Duncan noted that the IRS guidance “is among a number of steps policymakers can take” to boost solar as that industry reels from a depressed economy and local shutdowns.  

Treasury’s clarification on solar delivery may also assuage the fears of nervous tax equity investors concerned about the timing of solar equipment delivery, said Stoel Rives' Pearson.