Production Tax Credit (PTC) for Clean Energy
The Production Tax Credit pays 2.75¢ per kilowatt-hour of clean electricity generated over a 10-year period. For high-capacity-factor projects like wind and geothermal, the PTC can significantly outperform the ITC over the credit window.
How the PTC Works
The Production Tax Credit is an output-based credit — you earn it only when your facility actually generates electricity. At 2.75¢/kWh (2024 rate, adjusted annually for inflation), a 100 MW wind farm operating at a 35% capacity factor generates roughly $8.4 million in annual PTC value.
The PTC is earned for 10 years from the date the facility is placed in service. The credit rate in effect at the time construction begins is locked in, providing long-term financial certainty even if statutory rates change.
Like the ITC, the IRA made the PTC transferable and available as direct pay for tax-exempt entities, dramatically expanding who can benefit from clean energy credits.
Eligible Technologies
| Technology | PTC Rate |
|---|---|
| Wind (onshore) | 2.75¢/kWh |
| Offshore Wind | 2.75¢/kWh |
| Solar PV | 2.75¢/kWh |
| Geothermal | 2.75¢/kWh |
| Run-of-River Hydro | 2.75¢/kWh |
| Marine/Tidal | 2.75¢/kWh |
| Landfill Gas | 2.75¢/kWh |
| Municipal Solid Waste | 2.75¢/kWh |
ITC vs PTC — Comparison
The choice between ITC and PTC often depends on project type. Wind projects at high capacity factors typically favor PTC. Solar projects at lower capacity factors may favor the ITC. IncentEdge models both automatically.
| Factor | ITC | PTC |
|---|---|---|
| Credit Basis | % of capital cost | ¢/kWh produced |
| Credit Timing | Year 1 (upfront) | Years 1–10 (ongoing) |
| Best for wind (35%+ CF) | Lower value | Higher value typically |
| Best for solar (20–25% CF) | Often higher value | May be lower value |
| Risk | Lower (one-time, certain) | Higher (production-dependent) |
| Bonus adders | Energy community, domestic content | Same adders available |
Transferability & Direct Pay
Credit Transfer (Sale)
- Sell credits to unrelated buyers for cash
- For-profit taxpayers only
- Sale must occur in credit year
- Market rate: ~90–95 cents per dollar
Direct Pay Election
- Cash payment from IRS in lieu of credit
- Available to nonprofits, gov, tribal entities
- For-profit entities: limited direct pay available
- Election made at tax filing
Frequently Asked Questions
What is the PTC rate for wind in 2024?
The PTC rate for wind and other qualifying technologies is 2.75¢/kWh for 2024, adjusted for inflation annually. Projects without prevailing wage compliance receive only 0.3¢/kWh. The 10-year credit period begins when the facility is placed in service.
What is the difference between Section 45 and Section 45Y?
Section 45 is the legacy PTC that lists specific qualifying technologies (wind, solar, geothermal, etc.) for projects beginning construction through 2024. Section 45Y is the new technology-neutral Clean Electricity Production Credit that applies from 2025 forward for facilities with zero or net-negative greenhouse gas emissions.
Can you claim both PTC and ITC on the same project?
No. The ITC and PTC are mutually exclusive for the same energy property. Taxpayers must elect one or the other. The decision should be made based on which provides greater value given the project's cost, expected production, and capacity factor.
Is the PTC available for solar projects?
Yes. The IRA made solar eligible for the PTC for the first time, beginning with projects that start construction after 2022. Previously, solar could only use the ITC. This change gives solar developers the option to choose the credit structure that maximizes their project value.
How long does the PTC last?
The PTC is earned for 10 years from the date the facility is placed in service. The credit rate is locked at the rate in effect during the year construction begins and is adjusted for inflation annually during the 10-year production period.
Find Out if PTC or ITC Maximizes Your Project Value
IncentEdge models your project's exact economics using real production estimates, current credit rates, and all applicable bonus adders to find the optimal credit election.
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