PLR Clarifies that Solar Facilities are Not PUP for Utility or Investors

Monday, August 2, 2021 - 10:30am

The Internal Revenue Service (IRS) published a private letter ruling stating that facilities that generate solar electricity are not public utility property (PUP) under the Internal Revenue Code. PLR 202130005 clarifies that those facilities should not be treated as a PUP owned by a public utility or by the financial institution contributing capital. The IRS based the ruling on the fact that each partnership in a transaction will charge market-based rates to the operator for the electricity produced by the solar facilities. While the PLR applies only to the taxpayer involved, the ruling would make it more tax-efficient for regulated utilities to own and operate renewable energy and clean-tech facilities.

Renewable energy regulations and legislation will be among the topics at the Novogradac 2021 Fall Renewable Energy Conference, Nov. 4-5 in Washington, D.C.