The IRS notice offers a clearer definition of the requirement to "maintain a continuous program of construction" once it has begun. The new guidance indicates that any facility that is under construction in 2013 and has been placed in service before 1 January 2016 will automatically be classified as having met the benchmark.
If it the project is not placed in service before that date, the IRS will analyse whether it meets the criteria through the existing guidance.
The document also looks to further define the "master contract" rule whereby if a developer enters into a binding written contract for a specified number of components to be manufactured on its behalf this will be classed as having started work.
The new guidance makes it clear that this will also count towards the 5% "safe harbour" test, under which if a developer has spent 5% of the total capital spend for a project by the cutoff date it will qualify for the tax credit.
Regarding whether the transfer of a facility to another firm after construction begins would impact its qualification for the PTC, the notice clarifies that a company may still claim the tax credit even if it is not the company that started construction.
The PTC was extended for another year as part of the discussions surrounding the avoidance of the fiscal cliff in January.
Crucially, the language was also changed, requiring a project to be "under construction" rather than "in production" by the deadline in order to claim the $0.022 per KWh credit.
Read the full IRS guidance .
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