Under the facts of a recent private letter ruling, a wind farm was unable to complete its transmission line and set up a temporary intertie. The intertie allowed the wind turbines to produce energy on a routine basis although not to its rated capacity. The IRS concluded that the wind project was nevertheless placed in service for purposes of the wind energy credit and depreciation. The IRS reasoned that as long as the wind turbines were ready and available for use and producing commercial output on a regular basis, operating at full rated capacity is not necessary to establish that the wind project was placed in service.
This placed in service analysis is less relevant for renewable energy projects this year since the American Taxpayer Relief Act of 2012 allows projects that begin construction before the end of 2013 to claim the 10-year production tax credit.