The United States’ Congress approved a spending bill which includes a two-year extension of the investment tax credit (ITC) for solar power, a one-year extension of the production tax credit (PTC) for wind power projects, and an extension through 2025 for offshore wind tax credits. The bill also includes an allocation of $35 billion for energy research and development programmes. Although, the bill includes energy R&D investment plan and key renewable energy tax credit extensions, it does not include any “direct-pay” provisions.

The bill has assigned a significant amount energy research, development, demonstration (RD&D) and commercialisation funding. As per its provisions, billions of dollars will be invested in the next five years to facilitate technological advancements in solar and wind power, energy storage, geothermal power, marine energy, grid modernisation, energy efficiency, and carbon capture. Beyond the RD&D funds, the act will direct the Interior Department to set a target of at least 25 GW of solar, wind and geothermal production on public lands by 2025.

The extension of ITC for solar power will keep the current credit rate of 26 percent for projects that begin construction until the end of 2022, rather than expiring at the end of 2020. The PTC for wind power projects, will remain at 60 percent for projects that begin construction by the end of 2021, rather than being reduced to 40 percent as per the previous law. While the claiming of PTC is usually done by onshore wind project developers, offshore wind is also set to gain significant tax benefits through the extension of the ITC that can be used instead of the PTC for financing wind projects.