The rapidly growing offshore wind sector received a significant
boost at the end of 2020, thanks to the creation of a new
investment tax credit (“ITC”) for offshore wind
projects and the issuance of an IRS notice extending the safe
harbor period for finishing construction to ten years. These
changes are a welcome relief to offshore wind developers and
investors, who have lobbied for years for specific rules that take
into account the longer development time and more cost-intensive
nature of offshore wind projects.
ITC Background
Taxpayers are allowed to claim an ITC for a renewable energy
project equal to 30% of the basis of eligible energy property
placed in service in a particular year. The ITC is subject to
phase-out based on the year in which construction begins on a
project. While the Internal Revenue Code does not explain what it
means to “begin construction,” the IRS has issued a
series of notices that provide safe harbors for establishing when
construction
