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The Trump administration acted unreasonably in eliminating the 5% total cost threshold as a route for wind and solar projects to prove tax credit eligibility, a federal judge ruled.
However, given the remand, the potential for “an appeal of the ruling and possible procedural and substantive grounds on which it may be overruled,” and the timeline between the decision and the July 4 deadline, “it is not advisable” to rely on the 5% safe harbor for such projects, the law firm Foley said in a Monday blog post.
The Natural Resources Defense Council, one of the plaintiffs that brought suit against the IRS guidance in December, celebrated the decision in a Monday release and said it “adds to a string of defeats for the Trump administration and its wide-ranging attempts to block new wind and solar energy projects.”
The Treasury Department did not respond to a request for comment.
In her decision, Kollar-Kotelly found that the administration had not satisfied the Administrative Procedure Act’s requirement for “reasoned decisionmaking.”
“Although the Defendants have argued that wind and large-scale solar projects are situated differently than other projects because Congress set an earlier credit termination date for those specific technologies in the OBBBA, the record does not show that the agency made a reasoned decision that this difference in termination date alone should lead to a different methodology for determining the beginning of construction,” she said in her memorandum opinion.
Foley noted that since the matter has been remanded to the IRS, “the agency may issue new guidance, provided it engages in … reasoned decisionmaking, which could in theory reinstate the prohibition on the Five Percent Safe Harbor.”
For projects that cannot meet a physical work test prior to the OBBBA deadline and are expected to be placed in service after December 31, 2027, developers “should evaluate” whether utilizing the 5% safe harbor pathway is advantageous, “but given the uncertainty of what lies ahead, should be aware of the risks” with meeting the safe harbor now, the firm said.
The August guidance had not applied to solar facilities with a net output of less than 1.5 MW, which continued to be able to qualify for tax credits using the 5% cost threshold test.
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Physics, policy and politics are beginning to constrain some of the electric utility industry’s highest aspirations for data center-driven growth, Utility Dive learned in first quarter earnings calls.
Each of the 13 states in PJM, and the District of Columbia, have “fundamentally different regulatory structures, resource portfolios and politics,” FERC Chairman Laura Swett said. FERC will host a conference in July to identify potential reforms to PJM’s governance structure.
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Google has worked to make its data centers flexible, the company’s global head of data center energy told Utility Dive, but it’s often faster and more cost effective to pay other customers to shift their electricity usage.
“In Las Vegas, one of the fastest warming cities in the country, you cannot live without electricity,” said protest organizer Leslie Vega, who said she’s lost loved ones to heatstroke.
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