IRS Publishes Favorable Guidance on PTC “Start of Construction” Rules

Mar 11, 2015

Reading Time : 2 min

Under prior guidance, projects that qualified for PTCs by starting construction prior to 2014 had to be placed in service prior to the end of 2015.3 Today’s notice gives such projects (and other projects that started construction prior to 2015) until the end of 2016 to be placed in service. This gives the developers time to sign a power purchase agreement or an interconnection agreement or solve construction obstacles.

Notice 20115-25 is a function of the extension of the PTC that was enacted on December 19, 2014 in the Tax Increase Prevention Act of 2014. That legislation extended the “start of construction” deadline to December 31, 2014 (from the prior deadline of December 31, 2013) in order for projects to be eligible for PTCs. The IRS had published three favorable notices in 2013 and earlier in 2014, which contained critical safe harbors, that on their face applied only to projects that started construction prior to 2014. Notice 2015-25 confirms that projects that started construction in 2014 also benefit from those notices, and each date in those notices is effectively pushed out one year.

Notice 2015-25 also confirms that the projects that started construction in 2013 benefit from the additional year to be placed in service. In theory, there was a concern that the IRS would only give projects that started construction in 2014 the additional year to be placed in service under the safe harbor, while requiring projects that started construction in 2013 to be placed in service by the end of 2015 to meet the safe harbor. However, due to certain ambiguities in the “start of construction” rules, it could have been an administrative challenge for the IRS to draw a line between construction projects that were started in 2013 and those that were started in 2014. The IRS eliminated the need to distinguish between the two by extending the placed in service deadline for all projects that started construction at any time prior to January 1, 2015.

Notice 2015-25 is expected to enable a large number of projects to raise tax equity or construction debt (with the lenders having assurances they will be repaid by tax equity). It should enable 2015 and 2016 to be the strong years the wind industry has been anticipating.


1 Notice 2015-25 also applies to projects that are PTC eligible that the owners of opt to elect the investment tax credit in lieu of the PTC. See I.R.C. § 48(a)(5).

2 §§ 4.06 (“continuous work”), 5.02 (“continuous efforts”).

3 IRS Notice 2013-60, § 3.02.

Share This Insight

Previous Entries

Speaking Energy

July 17, 2025

On July 15, 2025, the Federal Energy Regulatory Commission (FERC or Commission) issued an order1 proposing to eliminate the soft price cap of $1,000 per
megawatt-hour (MWh) for bilateral spot sales in the Western Electricity Coordinating Council (WECC) that was implemented following the California energy
crisis. If adopted, the Commission’s proposal would eliminate the requirement that sellers make a filing with FERC cost justifying spot market sales in excess
of the soft price cap, which have become increasingly common in recent years as market conditions have continued to tighten throughout the West.
Eliminating the WECC soft price cap would provide sellers that make sales during periods when prices exceed the cap greater certainty that their sales will
not be second guessed after the fact.
...

Read More

Speaking Energy

June 25, 2025

On June 4–5, 2025, the Federal Energy Regulatory Commission (FERC or Commission) hosted a commissioner-led technical conference to discuss resource
adequacy challenges facing regional transmission organizations and independent system operators (RTO). The conference is a response to the growing
concern that multiple RTO regions across the country may not have sufficient supply available in the coming years to meet demand due to resource
retirements, the pace of new generation entry and higher load growth arising from the construction of data centers and reindustrialization.
...

Read More

Speaking Energy

June 12, 2025

We are pleased to share the presentation slide deck and a recording of Akin’s recently presented webinar, “Navigating U.S. Policy Shifts in the Critical
Minerals Sector.”
...

Read More

Speaking Energy

June 10, 2025

On June 4, 2025, the U.S. Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) announced revisions to its
procedures for pipeline safety enforcement actions. The changes, outlined in two new policy memoranda from PHMSA’s Office of the Chief Counsel (PHC),
aim to enhance due process protections for pipeline operators by clarifying how civil penalties are calculated and expanding the disclosure of agency records
in enforcement proceedings.
...

Read More

Speaking Energy

May 22, 2025

On May 19, 2025, the Department of Energy (DOE) finalized its 2024 LNG Export Study: Energy, Economic and Environmental Assessment of U.S. LNG Exports
(the 2024 Study) through the release of a Response to Comments on the 2024 Study. The Response to Comments concludes that the 2024 Study, as
augmented through public comments submitted on or before March 20, 2025, supporting a finding that liquefied natural gas (LNG) exports serve the public
interest. With the comment process complete, DOE will move forward with final orders on pending applications to export LNG to non-free trade agreement
(non-FTA) countries.
...

Read More

Speaking Energy

May 20, 2025

On Thursday, May 15, the Senate Commerce, Science & Transportation Subcommittee on Surface Transportation, Freight, Pipelines and Safety held a hearing
titled, “Pipeline Safety Reauthorization: Ensuring the Safe and Efficient Movement of American Energy.” The hearing examined legislative priorities for
reauthorizing the Pipeline and Hazardous Materials Safety Administration (PHMSA).
...

Read More

Speaking Energy

April 15, 2025

On April 9, 2025, President Trump issued an executive order (EO)1 directing several federal agencies and subagencies that regulate energy, environmental,
and conservation matters,2 including the Federal Energy Regulatory Commission (FERC) and the Department of Energy (DOE), to establish conditional sunset
dates for “regulations governing energy production.” The stated objective of the EO is to require agencies to periodically reexamine their regulations to
ensure that they continue to serve the public good. For FERC, the order covers regulations promulgated under the Federal Power Act (FPA), the Natural Gas
Act (NGA) and the Powerplant and Industrial Fuel Use Act (FUA)3, as amended, while DOE must consider regulations promulgated under the Atomic Energy
Act (AEA), the National Appliance Energy Conservation Act, the Energy Policy Act of 1992 (EPAct 1992), the Energy Policy Act of 2005 (EPAct 2005) and the
Energy Independence and Security Act of 2007 (EISA), as amended (collectively the Covered Regulations).4 To the extent the DOE has been directed to pro...
...

Read More

Speaking Energy

April 10, 2025

On April 8, 2025, President Trump issued an Executive Order (EO) directing the Department of Energy (DOE) to take steps to expand the use of its emergency
authority under Federal Power Act (FPA) Section 202(c) to require the retention of generation resources deemed necessary to maintain resource adequacy
within at risk-regions of the bulk power system regulated by the Federal Energy Regulatory Commission (FERC).1 The EO appears to envision a more active
role for DOE in overseeing and supporting the resource adequacy of the grid that deviates from the historic use of Section 202(c) and touches on issues at
the intersection of state and federal authority over resource planning.
...

Read More

© 2025 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.