(j) REPEAL OF RATABLE PRINCIPAL AMORTIZATION 
REQUIREMENT.—Subsection (l) of section 54 (relating to 
other definitions and special rules) is amended by striking 
paragraph (5) and redesignating paragraph (6) as para-
graph (5). 
(k) NET PROCEEDS.—Subsection (i) of section 54 
(relating to other definitions and special rules), as amend-
ed by subsection (j), is amended by redesignating para-
graphs (2), (3), (4), and (5) as paragraphs (4), (5), (6), 
and (7), respectively, and by inserting after paragraph (1) 
the following new paragraphs: 
‘‘(2) NET PROCEEDS.—The term ‘net proceeds’ 
means, with respect to an issue, the proceeds of such 
issue reduced by amounts in a reasonably required 
reserve or replacement fund. 
‘‘(3) LIMITATION ON AMOUNT IN RESERVE OR 
REPLACEMENT FUND WHICH MAY BE FINANCED BY 
ISSUE.—A bond issued as part of an issue shall not 
be treated as a clean renewable energy bond if the 
amount of the proceeds from the sale of such issue 
which is part of any reserve or replacement fund ex-
ceeds 10 percent of the proceeds of the issue (or 
such higher amount which the issuer establishes is 
necessary to the satisfaction of the Secretary).’’. 
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(l) OTHER SPECIAL RULES.—Subsection (i) of sec-
tion 54 ((relating to other definitions and special rules), 
as amended by subsections (j) and (k)) is amended by add-
ing at the end the following new paragraphs: 
‘‘(8) CREDITS
MAY
BE
SEPARATED.—There 
may be a separation (including at issuance) of the 
ownership of a clean renewable energy bond and the 
entitlement to the credit under this section with re-
spect to such bond. In case of any such separation, 
the credit under this section shall be allowed to the 
person who on the credit allowance date holds the 
instrument evidencing the entitlement to the credit 
and not to the holder of the bond. 
‘‘(9) TREATMENT FOR ESTIMATED TAX PUR-
POSES.—Solely for the purposes of sections 6654 
and 6655, the credit allowed by this section to a tax-
payer by reason of holding a qualified energy tax 
credit bond on a credit allowance date (or the credit 
in the case of a separation as provided in paragraph 
(8)) shall be treated as if it were a payment of esti-
mated tax made by the taxpayer on such date. 
‘‘(10) CARRYBACK AND CARRYFORWARD OF UN-
USED CREDITS.—If the sum of the credit exceeds 
the limitation imposed by subsection (c) for any tax-
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able year, any credits may be applied in a manner 
similar to the rules set forth in section 39.’’. 
(m) TERMINATION.—Subsection (m) of section 54 
(relating to termination) is amended by striking ‘‘2008’’ 
and inserting ‘‘2018’’. 
(n) CLERICAL REDESIGNATIONS.—Section 54, as 
amended by the preceding provisions of this section, is 
amended by redesignating subsections (g), (h), (j), (k), (l), 
and (m) as subsections (f), (g), (h), (i), (j), and (k), re-
spectively. 
(o) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 103. EXTENSION AND MODIFICATION OF INVESTMENT 
TAX CREDIT WITH RESPECT TO SOLAR EN-
ERGY PROPERTY AND QUALIFIED FUEL CELL 
PROPERTY. 
(a) 
SOLAR
ENERGY
PROPERTY.—Paragraphs 
(2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each 
amended by striking ‘‘2008’’ and inserting ‘‘2019’’. 
(b) ELIGIBLE FUEL CELL PROPERTY.—Paragraph 
(1)(E) of section 48(c) is amended by striking ‘‘2007’’ and 
inserting ‘‘2018’’. 
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(c) ENERGY PROPERTY TO INCLUDE EXCESS EN-
ERGY
STORAGE
DEVICE.—Clause 
(i) 
of 
section 
48(a)(3)(A) is amended to read as follows: 
‘‘(i) equipment which uses solar en-
ergy to generate electricity, to heat or cool 
(or provide hot water for use in) a struc-
ture, or to provide solar process heat, or 
advanced energy storage systems installed 
as an integrated component of the fore-
going, excepting property used to generate 
energy for purposes of heating a swimming 
pool,’’. 
(d) SOLAR LIGHTING EQUIPMENT TO INCLUDE 
SOLAR HYBRID LIGHTING SYSTEMS.—Clause (ii) of sec-
tion 48(a)(3)(A) is amended to read as follows: 
‘‘(ii) equipment which uses solar en-
ergy to illuminate the inside of a structure 
using fiber-optic distributed sunlight,’’. 
(e) MODIFICATIONS.— 
(1) SOLAR PHOTOVOLTAIC ENERGY PROPERTY 
CREDIT DETERMINED SOLELY BY KILOWATT CAPAC-
ITY.— 
(A) IN GENERAL.—Subsection (a) of sec-
tion 48 is amended by redesignating paragraph 
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(4) as paragraph (5) and by inserting after 
paragraph (3) the following new paragraph: 
‘‘(4) SPECIAL RULE FOR ENERGY CREDIT FOR 
SOLAR PHOTOVOLTAIC ENERGY PROPERTY.— 
‘‘(A) IN GENERAL.—For purposes of sec-
tion 46, the energy credit for any taxable year 
for solar photovoltaic energy property described 
in paragraph (3)(A)(i) which is used to gen-
erate electricity and which is placed in service 
during the taxable year is $1,500 with respect 
to each half kilowatt of capacity of such prop-
erty. Paragraph (2)(A)(ii) shall not apply to 
property to which the preceding sentence ap-
plies. 
‘‘(B) APPLICATION OF SPECIAL RULES FOR 
REHABILITATED OR SUBSIDIZED PROPERTY.— 
Rules similar to the rules of paragraphs (2)(B) 
and (5) shall apply to property to which this 
paragraph applies.’’. 
(B) 
CONFORMING
AMENDMENT.—Sub-
clause (II) of section 48(a)(2)(A)(i) is amended 
by striking ‘‘described in paragraph (3)(A)(i)’’ 
and inserting ‘‘which is described in paragraph 
(3)(A)(i) and to which paragraph (4) does not 
apply’’. 
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(f) CREDITS ALLOWED AGAINST THE ALTERNATIVE 
MINIMUM TAX.—Section 38(c)(4)(B) (defining specified 
credits) is amended by striking the period at the end of 
clause (ii)(II) and inserting ‘‘, and’’, and by adding at the 
end the following new clause: 
‘‘(iii) the portion of the investment 
credit under section 46(2) as determined 
under clauses (i) and (ii) of section 
48(a)(2)(A).’’. 
(g) EFFECTIVE DATES.— 
(1) Except as provided in paragraph (2), the 
amendments made by this section shall take effect 
on January 1, 2007. 
(2) The amendments made by subsection (c) 
shall apply to property placed in service after De-
cember 31, 2006. 
SEC. 104. EXTENSION AND MODIFICATION OF CREDIT FOR 
RESIDENTIAL 
ENERGY 
EFFICIENT 
PROP-
ERTY. 
(a) EXTENSION.—Subsection (g) of section 25D of 
the Internal Revenue Code of 1986 (relating to termi-
nation) is amended by striking ‘‘2008’’ and inserting 
‘‘2016’’. 
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(b) SOLAR ELECTRIC PROPERTY.—Paragraph (1) of 
section 25D(a) of such Code (relating to allowance of cred-
it) is amended by striking ‘‘30 percent of’’. 
(c) MODIFICATION
OF MAXIMUM CREDIT.—Para-
graph (1) of section 25D(b) of the Internal Revenue Code 
of 1986 (relating to limitations) is amended to read as 
follows: 
‘‘(1) MAXIMUM
CREDIT.—The credit allowed 
under subsection (a) for any taxable year shall not 
exceed— 
‘‘(A) $1,500 with respect to each half kilo-
watt of installed capacity of qualified solar elec-
tric property for which qualified solar electric 
property expenditures are made, 
‘‘(B) $2,000 with respect to any qualified 
solar water heating property expenditures, and 
‘‘(C) $500 with respect to each half kilo-
watt of capacity of qualified fuel cell property 
(as defined in section 48(c)(1)) for which quali-
fied fuel cell property expenditures are made.’’. 
(d) DEFINITION
OF
QUALIFIED
SOLAR
WATER 
HEATING PROPERTY EXPENDITURE.—Paragraph (1) of 
section 25D(d) of such Code is amended by striking ‘‘to 
heat water for use in’’ and inserting ‘‘to heat or cool (or 
provide hot water for use in)’’. 
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(e) DEFINITION
OF
QUALIFIED
PHOTOVOLTAIC 
PROPERTY EXPENDITURE.—Paragraph (2) of section 
25D(d) of such Code is amended by inserting ‘‘, including 
advanced energy storage systems installed as an inte-
grated component of the foregoing’’ after ‘‘taxpayer’’. 
(f) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX.— 
(1) IN GENERAL.—Section 25D(b) of the Inter-
nal Revenue Code of 1986 (as amended by sub-
section (b)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) CREDIT ALLOWED AGAINST ALTERNATIVE 
MINIMUM TAX.—The credit allowed under subsection 
(a) for the taxable year shall not exceed the excess 
of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under subpart A of part IV of subchapter A 
(other than this section) and section 27 for the 
taxable year.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subsection (c) of section 25D of such 
Code is amended to read as follows: 
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‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) for any taxable year 
exceeds the limitation imposed by subsection (b)(3) for 
such taxable year, such excess shall be carried to the suc-
ceeding taxable year and added to the credit allowable 
under subsection (a) for such succeeding taxable year.’’. 
(B) Section 23(b)(4)(B) of such Code is 
amended by inserting ‘‘and section 25D’’ after 
‘‘this section’’. 
(C) Section 24(b)(3)(B) of such Code is 
amended by striking ‘‘sections 23 and 25B’’ 
and inserting ‘‘sections 23, 25B, and 25D’’. 
(D) Section 26(a)(1) of such Code is 
amended by striking ‘‘and 25B’’ and inserting 
‘‘25B, and 25D’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures made in taxable 
years beginning after December 31, 2006. 
SEC. 105. 15-YEAR RECOVERY PERIOD FOR PROPERTY 
USED IN THE TRANSMISSION OR DISTRIBU-
TION OF ELECTRICITY FOR SALE. 
(a) IN GENERAL.—Subparagraph (E) of section 
168(e)(3) is amended by striking clause (vii), by redesig-
nating clause (viii) as clause (ix), and by inserting after 
clause (vi) the following new clauses: 
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‘‘(vii) any section 1245 property (as 
defined in section 1245(a)(3))— 
‘‘(I) used in the transmission at 
69 or more kilovolts of electricity for 
sale and the original use of which 
commences with the taxpayer after 
April 11, 2005, or 
‘‘(II) used in the transmission or 
distribution of electricity for sale and 
which is originally placed in service 
after the date of the enactment of this 
subclause, 
‘‘(viii) initial clearing and grading 
land improvements with respect to any 
electric utility transmission and distribu-
tion plant, and’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (3) of section 168(e) is amended 
by striking subparagraph (F). 
(2) The table contained in section 168(g)(3)(B) 
is amended by striking the items relating to sub-
paragraphs (E)(viii) and (F) and inserting the fol-
lowing new items: 
‘‘(E)(viii) ..............................................
(E)(ix) ..................................................
35’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
TITLE II—PRODUCTION 
INCENTIVES 
SEC. 201. EXTENSION OF PRODUCTION CREDIT FOR WIND, 
SOLAR, AND GEOTHERMAL. 
Subsection (d) of section 45 is amended— 
(1) in paragraph (1) by striking ‘‘January 1, 
2009’’ and inserting ‘‘January 1, 2018’’, and 
(2) in paragraph (4) by striking ‘‘January 1, 
2009 (January 1, 2006, in the case of a facility 
using solar energy)’’ and inserting ‘‘January 1, 
2018’’. 
SEC. 202. ELECTRICITY PRODUCED FROM OCEAN ENERGY. 
(a) IN GENERAL.—Section 45(c)(1) (defining quali-
fied energy resources) is amended by striking ‘‘and’’ at 
the end of subparagraph (G), by striking the period at 
the end of subparagraph (H) and inserting ‘‘, and’’, and 
by adding at the end the following new subparagraph: 
‘‘(I) ocean energy.’’. 
(b) DEFINITION OF RESOURCES.—Section 45(c) is 
amended by adding at the end the following new para-
graph: 
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‘‘(10) OCEAN ENERGY.—The term ‘ocean en-
ergy’ means energy derived— 
‘‘(A) in the case of ocean thermal energy, 
generation through closed-cycle, open-cycle and 
hybrid processes, and 
‘‘(B) in the case of ocean mechanical en-
ergy, generation through channel systems, float 
systems, and oscillating water column sys-
tems.’’. 
(c) FACILITIES.—Section 45(d) is amended by add-
ing at the end the following new paragraph: 
‘‘(11) OCEAN ENERGY FACILITY.—In the case 
of a facility using ocean energy to produce elec-
tricity, the term ‘qualified facility’ means any facility 
owned by the taxpayer which is originally placed in 
service after the date of the enactment of this para-
graph and before January 1, 2018.’’. 
(d) CREDIT RATE.— 
(1) IN GENERAL.—Section 45(b) is amended by 
adding at the end the following new paragraph: 
‘‘(5) CREDIT
RATE
FOR
ELECTRICITY
PRO-
DUCED
AND
SOLD
FROM
OCEAN
ENERGY
FACIL-
ITY.—In the case of electricity produced and sold in 
any calendar year after the date of the enactment of 
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