Sunrise brief: IRS extends ITC safe harbor for solar projects, offering ‘much-needed breathing room’

The Internal Revenue Service released a notice extending safe harbor for solar projects under the Section 48 Investment Tax Credit (ITC).

Notice 2021-41 extends the safe harbor rules under IRS Notice 2018-59 from four years to six years for projects that started construction from 2016-2019, and from four years to five years for projects that started construction during 2020.

The notice also provided a new choice to demonstrate continuous work, known as a continuity requirement, on a project, providing for the ability to use one of two standards, regardless of how an earlier decision was made on how to start construction.

The IRS said a taxpayer has two methods to demonstrate the taxpayer has begun construction of a project, the Physical Work Test and the Five Percent Safe Harbor. After a taxpayer begins construction of a project, the taxpayer must also make continuous progress toward completion to satisfy beginning of construction requirements. Under the Physical Work Test, a taxpayer uses the Continuous Construction Test to demonstrate continuous progress. Under the Five Percent Safe Harbor, a taxpayer uses the Continuous Efforts Test.

Notice 2021-41 aims to clarify hat if the Continuity Safe Harbor does not apply, then the continuity requirement is satisfied if the taxpayer demonstrates satisfaction of either the Continuous Construction or the Continuous Efforts Tests, regardless of the method that the taxpayer used to start construction.

In a statement on the action, the Solar Energy Industries Association said that many solar companies have faced disruptions to their project timelines due to COVID-19. “This new notice from the IRS will give them much-needed breathing room to complete these projects,” SEIA said.

Crossover Energy enters deal with KKR

Crossover Energy Partners said it will be the energy transition solutions partner for investment house KKR.

In its role, Crossover will oversee the origination, development, financing, construction, and long-term operation of clean energy projects in collaboration with KKR’s infrastructure team.

The two will focus on originating structured Power Purchase Agreements, Tolling Agreements, Build-Transfer Agreements, as well as offtake optimization, contract structuring, and new opportunities in segments such as EV fleets and hydrogen.

Over the last decade, KKR has deployed more than $4.7 billion in renewable assets, with a power generation capacity of 12.5 GW. Over the past 12 months, KKR has invested in Caruna, Finland’s largest electricity distribution company; NextEra Energy; Virescent Infrastructure, a newly created platform to acquire renewable energy assets in India; and First Gen, one of the Philippines’ largest independent power producers.

EPRI to address reliability impact of weather hazards

The Electric Power Research Institute (EPRI) announced a new initiative to help ensure the ongoing ability to meet electricity demand by better anticipating and assessing risks to power supply resources due to extreme weather and other hazards.

The initiative is designed to address emerging resource adequacy risks illustrated by recent power disruptions in areas including Texas and California.

The project brings together grid operators, utilities, researchers, and other key stakeholders from across the electric power industry to accelerate the evolution of resource adequacy processes and tools for a decarbonized energy system that must serve society in the face of increasing threats.

The initiative is focused on four areas:

• Developing metrics, criteria, and scenarios to assess risk and guide investment decisions;
• Creating models and data to characterize how system resources perform under all operating conditions;
• Accelerating the development of resource adequacy assessment tools to advance new solutions benefiting society; and
• Demonstrating the value of new approaches through “real world” applications across diverse regions to guide employment of new processes.

Nautilus buys community solar assets

Nautilus Solar Energy said it acquired 21 community solar projects in New York and Maryland totaling almost 60 MW of capacity. Sixteen projects in New York and five in Maryland currently provide community solar power to 9,500 households and two school districts through a Power Purchase Agreement (PPA). Nautilus’s Asset Management division will be responsible for project management, long-term asset management, and maintenance for the life of the projects.

LS Power completes asset acquisition

LS Power completed its acquisition of 25 solar power facilities totaling 467.8 MWdc from Public Service Enterprise Group Incorporated.

The solar portfolio spans 14 states and five regional transmission organizations. The assets include 12 facilities in PJM (198.7 MW); 7 facilities in CAISO/WEIM (151.6 MW); 4 facilities in SERC/SW (103.3 MW); 1 facility in NYISO (10.6 MW); and 1 facility in ISO-NE (3.6 MW).

VDE stake in Renewable Energy Test Center

Renewable Energy Test Center and VDE US Holdings Inc. said that VDE has acquired a 70% stake in certification and testing company RETC. The acquisition is intended to speed RETC’s growth and strengthen the VDE Group’s presence in the renewable energy sector.

VDE has been active in the solar and energy storage markets for more than 15 years. Its stake in RETC “significantly expands” its footprint in renewables, particularly in the U.S., a statement said. ” The combination is intended to provide customers worldwide with testing, inspection, certification, and data services that de-risk renewable energy projects like solar and energy storage installations in utility-scale and below.