The Investment Tax Credit (ITC) and the Production Tax Credit (PTC) for Small-Scale Projects
The Investment Tax Credit (ITC) and the Production Tax Credit (PTC) have different eligibility requirements, particularly for small-scale projects. Here’s a comparison of their requirements:
Investment Tax Credit (ITC) for Small-Scale Projects
- Eligible Technologies: Solar, energy storage, microgrid controllers, small wind, fuel cells, biogas, and combined heat and power properties.
- Credit Rate: 30% of the project’s qualified costs through 2032, if certain labor and wage requirements are met. For projects in low-income communities or on Indian land, an additional bonus credit of 10% or 20% can be applied.
- Project Size Limitation for Bonuses: Projects under 5 MW are eligible for low-income community bonuses.
- Labor Requirements: Prevailing wage and apprenticeship requirements apply to projects of over 1 megawatt or those starting construction after January 29, 2023.
Production Tax Credit (PTC) for Small-Scale Projects
- Eligible Technologies: Primarily wind, with some eligibility for other technologies.
- Credit Calculation: Based on electricity production rather than project costs. The PTC rate is determined by the year the project begins construction.
- Credit Rate: Was set at 2.3 cents per kWh in 2016, with a phased decrease over the following years. Projects that began construction before the phase-down years qualify for higher rates.
- Project Size Limitation: No specific size limits are detailed for small-scale projects, but prevailing wage and apprenticeship requirements may apply similarly to ITC projects.
- Labor Requirements: Similar labor requirements as the ITC apply to PTC projects, though they may be less stringent for smaller projects or those beginning construction early.
Key Differences for Small-Scale Projects
- Credit Basis: ITC is based on project costs, while PTC is based on electricity produced.
- Eligible Technologies: ITC includes more diverse renewable energy technologies, including solar and energy storage, while PTC primarily targets wind projects.
- Size Considerations: Small-scale projects (under 5 MW) are eligible for additional ITC bonuses but do not have specific PTC size restrictions.
- Labor and Wage Requirements: Both credits have similar labor requirements, but these may be waived or less strict for smaller PTC projects.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-the-eligibility-requirements-for-the-itc-and-ptc-differ-for-small-scale-projects/
