The first draft of the Tax Cuts and Jobs Act has been unveiled before a committee of the United States (US) House of Representatives and energy is a key issue of the new legislation proposal. New provisions in the Act will significantly affect renewable energy production tax credits (PTCs) for wind projects (commencing construction from 2017 onwards), which would drop from the current US$2.4c/kWh to US$1.5c/kWh for the first 10 years of operation. The PTC allows for a tax credit for each kWh generated and was created by the US Congress as a tool for energy developers to access capital. It is an inflation-adjusted tax credit for electricity and in December 2015, it was extended until the end of 2019.
As for solar energy, the Investment Tax Credit (ITC) would remain at 30% for properties where construction begins before 2020, phasing down to 26% for property with construction beginning before 2021 and to 22% for projects beginning construction before 2022. Besides, the proposed legislation would terminate the 10% ITC for facilities entering the construction phase after 2027.