On July 14, the Internal Revenue Service (IRS) published Notice 2015-51, which postpones the effective date of safety and performance standards mandated by Notice 2015-4. The standards in Notice 2015-4 originally applied to small wind turbines acquired or placed in service after February 2, 2015. A small wind turbine is defined as one with a nameplate capacity of 100 KW or less. Notice 2015-51 postpones the effective date to December 31, 2015 for small wind turbines with a rotor swept area of more than 200 square meters; for small wind turbines with rotor swept area of 200 square or less the effective date remains February 2, 2015.
The first notice is discussed in the blog post of January 15, which can be viewed here. The extension of the grace period from February 2 to December 31 was apparently triggered by certain small wind manufacturers communicating to the IRS that it was more time-consuming and costly to obtain the required certifications than the IRS had anticipated. Such manufacturers found themselves shut out of the U.S. market, since purchasers were reluctant after February 2, to buy turbines that did not currently have the necessary certification. Owners of such turbines would not be eligible to claim the 30 percent investment tax credits available for the turbines if the documentation of the required certification did not appear on the manufacturer’s website prior to the due date for the owner’s tax return on which it claimed the investment tax credit.
The first notice was reportedly triggered by certain industry participants highlighting that the engineering standards among small wind turbine manufacturers varied noticeably. The first notice provides small wind turbine manufacturers with a choice to comply with either an American Wind Energy Association standard or an International Electro Technical Commission standard, and that is unchanged in the second notice.
Code Section 48(a)(3)(D) authorizes the IRS to prescribe safety and performance standards for any investment tax credit eligible technology (e.g., solar). It is not clear whether the IRS is just warming up with small wind and plans to publish standards in the future for other renewable energy technologies or whether the IRS, in fact, observed a performance or safety issue in the small wind industry that merited the publication of the first notice.
The investment tax credit for small wind expires for turbines placed in service after 2016. Unlike solar, it is a complete expiration and not merely ratcheting down to a 10 percent investment tax credit. The small wind industry is optimistic that the expiry date for its tax credit will be extended by Congress. However, since the credit does not expire until next year, it is not garnering the attention of legislators at the moment.