U.S. Treasury Issues Final Regulations for Energy Credit Eligibility and Requirements
Key Ideas
- Final regulations for the Section 48 Energy Credit provide a pathway for clean energy projects to qualify for a 30% tax credit, with additional incentives for meeting wage requirements and being located in eligible energy communities.
- Energy storage technologies, including hydrogen storage, are addressed in the regulations, specifying minimum capacity requirements and clarifying eligibility criteria for various systems like thermal storage linked to HVAC systems.
- The regulations outline prevailing wage and apprenticeship requirements, exceptions for projects initiated before January 29, 2023, and rules for co-located energy storage systems with facilities claiming other energy credits like wind or solar power.
- Clarifications are made for solar energy projects, underground fluid use in geothermal heat pumps, and offshore wind projects, with a focus on providing clear guidance and flexibility for taxpayers to claim the Investment Tax Credit (ITC).
The U.S. Department of the Treasury has released final regulations for the Section 48 Energy Credit, also known as the Investment Tax Credit (ITC), aimed at incentivizing clean energy projects. The credit provides a 30% tax credit, starting at 6% base rate, with possibilities to reach the full credit through meeting wage requirements and being in eligible energy communities. Projects using domestic content can also receive extra credits. The regulations address various technologies eligible for the credit, including renewable energy systems, biogas property, interconnection property, and energy storage technologies. Specific attention is given to energy storage, including hydrogen storage, with requirements like a minimum 5 kWh capacity. The rules provide flexibility for current and future technologies, focusing on the function of the property rather than a strict list of eligible technologies. Clarifications are made for solar energy projects, geothermal heat pumps, and offshore wind projects. The final regulations aim to offer clear guidance and flexibility while ensuring taxpayers understand the requirements for claiming the ITC.