Citing a large number of wind and solar farms hit by "COVID-19 related disruptions," three Republican senators have asked U.S. Treasury Secretary Steven Mnuchin to expand on his department's prior commitment to modify tax incentives for eligible projects.

In a May 21 letter, U.S. Sens. Lisa Murkowski, R-Alaska, Susan Collins, R-Maine, and Thom Tillis, R-N.C., asked Mnuchin to extend safe harbor requirements for both the investment tax credit and the production tax credit, critical incentives for solar and wind installations. Specifically, the senators asked for an extension of "start of construction" requirements and a modification of a "physical work test" to allow developers to qualify for the tax credits.

Earlier in May, the Treasury Department said in a letter to Sen. Chuck Grassley, R-Iowa, and other lawmakers that it planned to "modify the relevant rules ... in the near future."

The detailed changes offered by Murkowski, Collins and Tillis "will help account for COVID-19 and other current impacts, which have affected supply chains and construction operations but are out of the control of those seeking to claim the [tax credits] for qualifying energy properties," the senators said.

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Under Internal Revenue Services guidance, developers must start building by a certain date, or alternatively spend at least 5% of total project cost, to qualify for the tax incentives. Under the rules, equipment deliveries must occur within 105 days from when the money is spent. Because of supply chain disruptions related to the coronavirus pandemic, however, many solar developers did not receive their purchases by that deadline, according to the letter.

A large number of solar developers purchased equipment under the safe harbor rules in order to qualify projects at the 2019 incentive level equaling 30% of their cost. The investment tax credit dropped to 26% in 2020 and is scheduled to fall to 22% in 2021, before falling to 10% for business tax filers in 2022 and zeroing out for individuals.

"Ongoing uncertainty over equipment delivery in 2020 could lower investment in new projects, as well," the senators said. They asked for projects affected by the COVID-19 delays to be able to qualify for higher incentive levels as long as they receive their purchases by the end of the following year for 2020 and 2021, instead of the 105-day deadline.

They also requested the Treasury Department clarify that developers unable to qualify for incentives by maintaining a "continuous program of construction," because of permitting and other delays, be allowed to qualify under a lower "continuous efforts" threshold.

"At a time when the renewable energy industry is facing significant challenges, these steps will help protect American jobs and provide investor certainty as we work to rebuild our economy," the senators said.

In April alone, the renewable energy sector shed nearly 72,000 jobs, with solar installers representing the hardest hit segment, adding urgency to the industry's calls for congressional aid. In addition to the safe harbor amendments, the Solar Energy Industries Association is asking for an extension of tax credits and the ability to take them instead as cash payments.