The final rules for clean electricity production credit and the clean electricity investment credit provide clarity around what clean electricity technologies qualify for the credits.
The U.S. Department of the Treasury and the IRS released final rules for clean electricity production credit (section 45Y) and the clean electricity investment credit (section 48E), also known as technology-neutral credits.
The final rules provide clarity around what clean electricity zero-emissions technologies qualify for the credits, which, in addition to solar, include wind, hydropower, marine and hydrokinetic, geothermal, nuclear, and certain waste energy recovery property.
The National Labs are analyzing the lifecycle emissions of electricity production using certain biomass technologies, based on the requirements in the final rules. Treasury expects this analysis, when complete, will provide further clarity for taxpayers.
“At long last, we have a well-designed, technology-neutral, level playing field for energy tax policy that will lead to significant economic growth, job creation, and lower costs for American consumers,” said Ray Long, president and CEO of the American Council on Renewable Energy (ACORE). “The technology-neutral tax credit simplifies the tax code and is expected to cut the average annual electric bill by $29-$74 per household in the next six years and $42-$95 by 2035.”
The first Annual Table confirming the list of qualifying technologies will be released “imminently,” according to Treasury and IRS.
The technology neutral credits encourage innovation as well as investment in clean energy technologies. Mike Carr, executive director of the Solar Energy Manufacturers for America (SEMA) Coalition sees the credits as a boost to U.S. manufacturing. “The industry is currently spending billions to open new factories across the United States. This is a significant step forward in securing demand from those new factories to further bolster our economic and energy security,” Carr said.
A report from the Department of Energy says the tech-neutral credits, along with other Inflation Reduction Act and Bipartisan Infrastructure Law provisions, are expected to save American families up to $38 billion on electricity bills through 2030. According to ACORE’s Long, “This amounts to tens of billions of dollars in electricity cost savings for U.S. families.”
“Research also shows how technology-neutral tax credits will spur an additional $336 billion in investment, 237 gigawatts of clean energy deployment, and a net gain of 97,000 jobs over the next 15 years in comparison to a scenario where these tax credits are not present,” Long said. “This is truly a game-changing policy, and we’re looking forward to the affordable, reliable, clean electricity that it will help enable.”
The existing production tax credit and investment tax credit will be available to projects that began construction before 2025. Qualifying projects placed in service after December 31, 2024 will be eligible for the new Clean Electricity Credits.
As with other clean energy tax credits, taxpayers must meet standards for paying prevailing wages and employing registered apprentices.
The technology-neutral clean electricity production and investment tax credits are also eligible for bonus credits related to siting projects in energy communities and meeting certain standards for using domestic content.
