New Clean Renewable Energy Bonds (I.R.C. 54C)

March 2, 2015

General Matters:

See Notice 2015-12 regarding new application procedures for remaining New Clean Renewable Energy Bonds (NCREBs) volume cap.

See Notice 2010-35 permitting the subsidy option for qualified tax credit bonds.


Production Tax Credits and New CREBs (I.R.C. 45)

June 23, 2009

Is the Section 45 renewable energy production tax credit reduced for an issuer that issues taxable New Clean Renewable Energy Bonds (“New CREBs”)? Do New CREBs constitute “subsidized energy financing” within the meaning of Section 45(b)(3)(A)(iii)? Certain rumors suggest that the Department of the Treasury will be issuing a notice or ruling of some type in the near future clarifying this point. The probable conclusion may indicate that New CREBs are to be considered “subsidied energy financing.”

The production tax credit was authorized by the Energy Policy Act of 1992 and is considered the most significant factor behind the growth of utility-scale wind energy.  The credit is currently 2 cents per kilowatt-hour on corporate income tax for electricity generated by qualified energy projects. The credit is available for the first ten years of operation and is adjusted annually for inflation.

For a general overview of Section 45 production tax credits and Section 48 investment tax credits, see this presentation by Greenberg Traurig. For a general discussion of investment tax credits and renewable energy production tax credits, see also IRS Notice 2009-52.

See also this KPMG memorandum regarding expiration dates.