Final Regulations on Energy Credits and ITCs under Internal Revenue Code
Key Ideas
- Final regulations address significant questions on energy property definitions, qualified biogas, hydrogen storage, and prevailing wage recapture.
- Changes to definitions and rules provide relief to stakeholders in the RNG and renewable energy industries.
- Clarifications on energy project definitions and interconnection ITCs offer guidance and certainty for taxpayers.
- Treasury's approval of solar energy project example reinforces support for renewable energy investments.
On December 4, 2024, the Department of the Treasury and the IRS issued final regulations for the energy credit under section 48 of the Internal Revenue Code. The Final Regulations address key questions from last year's Proposed Regulations, including updates to the definition of energy property, qualified biogas property, and hydrogen storage property. Changes to definitions and rules provide relief to stakeholders, such as including upgrading equipment in qualified biogas property definition and removing the end-use requirement for hydrogen energy storage property. Additionally, the Final Regulations clarify rules for energy storage property modifications, energy project definitions, and interconnection ITCs. These changes aim to protect taxpayers and provide certainty for renewable energy investments. Notably, the example provided for a solar energy project reinforces Treasury's support for renewable energy projects.