The U.S. Department of the Treasury and the IRS recently released Final Regulations regarding the Investment Tax Credit (ITC) under Section 48 of the Internal Revenue Code, impacting energy projects and property definitions post-amendments by the Inflation Reduction Act of 2022. The new regulations aim to streamline the process for claiming ITCs and provide clarity on key aspects affecting energy project developers and investors. The Final Regulations offer crucial updates on energy property definitions, including thermal energy storage, hydrogen energy storage, and qualified biogas property. By clarifying what qualifies for ITCs, the regulations aim to incentivize investments in diverse energy projects. Additionally, guidance on prevailing wage and apprenticeship requirements ensures compliance with labor standards, benefiting workers involved in energy project construction. The rules also address tax principles related to interconnection property and transactions like sale-leasebacks, ensuring a clear framework for tax benefits. Moreover, the regulations outline how recapture impacts ITC amounts during property transfers, providing transparency for taxpayers. Specifically, the regulations detail requirements for thermal energy storage properties, establishing a safe harbor provision to facilitate compliance and eligibility for tax credits. They also elaborate on eligible hydrogen energy storage property, including storage tanks, compressors, and associated infrastructure. Moreover, qualified biogas property criteria are expanded to cover gas cleaning equipment and compliance considerations for methane content. Overall, the Final Regulations are positive for the energy industry, offering a comprehensive framework for claiming ITCs, defining energy property standards, and ensuring compliance with labor and tax regulations. The effective date of December 12, 2024, marks a significant milestone for energy project stakeholders looking to leverage tax incentives and navigate regulatory requirements effectively.