The renewable electricity production tax credit (PTC) is a per-kilowatt-hour (kWh) tax credit for electricity generated using qualified energy resources. The credit expires at the end of 2020, so that only projects that began construction before the end of 2020 qualify for tax credits. Since the PTC is available for the first 10 years of production at a qualified facility, PTCs will continue to be claimed after the PTC's stated expiration date. Whether the PTC should be extended, modified, or

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... lowed to expire as scheduled is an issue Congress may choose to consider. Most recently, the PTC was extended in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, Division Q of the Further Consolidated Appropriations Act of 2020 (P.L. 116-94). For wind facilities, the PTC was extended for one year. Previously, construction had to begin on qualifying wind facilities before the end of 2019, and facilities that began construction in 2019 could claim a PTC that was reduced by 60% from the full PTC amount. With the one-year extension, wind facilities starting construction in 2020 became PTC-eligible. The PTC is reduced by 40% from the full PTC amount for wind projects beginning construction in 2020. For nonwind facilities, P.L. 116-94 extended the start of construction deadline by two years, from December 31, 2018, to December 31, 2020. The PTC for wind and closed-loop biomass was first enacted in 1992. When first enacted, the PTC was scheduled to expire on July 1, 1999. Since 1999, the PTC has been extended 12 times. On several occasions, the PTC was allowed to lapse before being retroactively extended. In addition to being extended, the PTC has also been expanded over time to include additional qualifying resources. In 2019, closed-loop biomass and geothermal technologies qualified for the full credit amount of 2.5 cents per kWh. Other technologies (open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower, marine, and hydrokinetic) qualified for a half-credit amount, or 1.2 cents per kWh in 2019. Wind facilities starting construction in 2019 will qualify for 40% of the full credit amount, whereas wind facilities that start construction in 2020 will qualify for 60% of the full credit amount. Credit amounts are adjusted annually for inflation. The Joint Committee on Taxation (JCT) estimates that in 2019, foregone revenues (or tax expenditures) for the PTC were $5.1 billion. Before P.L. 116-94 was enacted, the JCT estimated that tax expenditures for the PTC would be $19.3 billion between 2019 and 2023. It was later estimated that the PTC extension in P.L. 116-94 will reduce tax revenue by an additional $2.1 billion between 2020 and 2029. Extensions or modification of the PTC could increase or decrease the estimated tax expenditures associated with this provision. The PTC has been important to the growth and development of renewable electricity resources, particularly wind. Tax incentives for renewables, however, may not be the most economically efficient way to correct for distortions in energy markets or to deliver federal financial support to the renewable energy sector. Tax subsidies reduce the average cost of electricity, increasing demand for electricity overall, countering energy-efficiency and emissionsreduction objectives. Subsidies delivered as nonrefundable tax incentives often require renewable energy developers to find "tax-equity" partners to provide equity investments in exchange for tax credits. The use of tax equity reduces the amount of the incentive that flows directly to the renewable energy sector. There are a number of policy options that might be considered related to the PTC. For example, the PTC could be allowed to expire as scheduled. Alternatively, the PTC could be temporarily extended. Extensions of the PTC might also include modifications to the phaseout for wind. Modifications to the PTC could include options that could make it easier for certain projects to receive benefits directly, such as allowing the option of grants or direct payments in lieu of tax credits. Another option would be to make the PTC a permanent feature of the tax code.