Incentives
Production Tax Credit (PTC)
Definition
A federal tax credit that provides a per-kilowatt-hour (kWh) tax benefit for electricity generated from qualified renewable energy facilities, including wind, solar (large projects), geothermal, and other clean energy sources. Under the IRA, the 2024 base PTC is approximately $0.03/kWh, indexed to inflation.
Why It Matters for Your Business
The PTC is an ongoing credit tied to actual energy production, making it attractive for large commercial and industrial renewable projects where the facility will generate substantial electricity over 10 years. Unlike the ITC (a one-time credit), the PTC accumulates with every kWh produced.
Frequently Asked Questions
ITC vs. PTC — which is better for commercial solar?
It depends on project size, financing, and tax position. Smaller projects often favor the ITC (immediate one-time credit). Large utility-scale projects with long operational horizons may favor the PTC for its multi-year cumulative value. Model both scenarios.
How long does the PTC last?
The PTC is claimed for 10 years from the placed-in-service date of the facility under current IRA rules.