Energy Update

Effects of Tax Reform on the Renewable Energy Sector

On December 22, 2017, the tax reform bill known as the Tax Cuts and Jobs Act (H.R. 1) (the "Tax Reform Act") was signed into law. Prior to its enactment, the renewable energy industry was deeply concerned about proposals in the House of Representatives (the "House Bill") and the Senate (the "Senate Bill") that, if enacted, would have had significant adverse effects on the utility of both the renewable energy investment tax credit (ITC) and energy production tax credit (PTC).

Most of these unfavorable proposals were withdrawn, and the Tax Reform Act largely preserves the benefits of the ITCs and PTCs. The final version of the Tax Reform Act also partially alleviated the negative effect that the so-called base erosion anti-abuse tax (the BEAT) would have had on the ITC and PTC, but only on a temporary basis, creating significant uncertainty for certain taxpayers considering tax equity investments. This article